US States Seek to Halt Paramount Merger

California and 11 other US states filed a lawsuit on Monday seeking to block Paramount's proposed $110bn acquisition of Warner Bros. Discovery. The coalition of Democratic attorneys general also asked a federal court in Oakland to issue a preliminary injunction preventing the deal from moving forward while the case is heard.

The states argue that the merger would create one of the world's largest media companies, giving it more than 27% of the US market for film distribution and cable television channels. They contend the combined company would reduce competition, leading to higher prices for consumers, weaker bargaining power for movie theaters and lower wages for thousands of workers in the entertainment industry.

Paramount rejected the allegations, arguing that the lawsuit misapplies US antitrust law. The company said the merger would generate cost savings, increase investment in film production and create a stronger competitor to streaming giants such as Netflix and Disney.

The case also carries political overtones. Critics have questioned the Justice Department's approval of the merger under President Donald Trump's administration, citing reported ties between Paramount's controlling shareholders and the president. Paramount has denied that politics played any role in the regulatory process.

The legal challenge could delay the transaction for months, increasing financial pressure on Paramount. Under the terms of the agreement, if the merger is not completed by the end of October, Paramount could face contractual payments of $650m per quarter until the deal is finalized or terminated.

(Reuters, Max)