California Attorney General pledges to closely examine Paramount’s agreement with Warner Bros. Discovery

Paramount's $110 Billion Acquisition of Warner Bros. Discovery Under Scrutiny

Late last month, Paramount announced a massive $110 billion agreement to acquire Warner Bros. Discovery, a move that has sent shockwaves through Hollywood.

Photo credit: Myung J. Chun/Los Angeles Times

California Steps Up Antitrust Oversight

Rob Bonta, California's Attorney General, criticized the federal government for stepping back from its antitrust responsibilities. He emphasized that California and other states must now take the lead in safeguarding consumer interests.

Speaking at a Capitol Forum event in Beverly Hills focused on antitrust and Hollywood's future, Bonta addressed the audience just days after the U.S. Department of Justice settled its case against Live Nation and Ticketmaster, leaving state attorneys general to pursue antitrust actions independently.

This shift has exposed significant gaps in federal antitrust enforcement. Attorneys general, especially in states led by Democrats, argue that their involvement is increasingly vital to challenge anti-competitive practices.

Bonta remarked that President Trump has relinquished the federal government's duty to hold large corporations accountable and maintain a fair marketplace.

Hollywood Merger Faces State Scrutiny

Bonta's remarks come as the Paramount-Skydance merger with Warner Bros. Discovery appears to be moving smoothly through federal review, with tacit approval from Trump. The deal, revealed at the end of last month, has unsettled Hollywood labor unions and antitrust specialists. It would unite iconic film studios, major TV production companies, and prominent news outlets like CBS News and CNN, along with numerous cable channels.

Bonta noted that Paramount and Warner Bros. have not yet passed regulatory review. He stated, "My office is actively investigating this deal and we plan to conduct a thorough review."

California may pursue its own legal action to block Paramount's acquisition or collaborate with other states to challenge the merger or seek concessions, even if the Justice Department ultimately approves the transaction.

Bonta highlighted several concerns, including the shrinking Hollywood job market, the consolidation of streaming platforms such as Paramount+, HBO Max, Pluto, and Discovery+, and the possibility of increased prices and reduced wages.

"The entertainment industry is uniquely Californian," Bonta said. "It's woven into the state's identity."

Photo credit: Paul Kuroda/For The Times

Regulatory Review and Industry Impact

Paramount submitted its request for Justice Department approval in December, starting the regulatory review process. Last month, a crucial deadline for federal regulators to raise objections to the acquisition passed without any response from Washington.

Paramount has indicated that it could finalize the deal by September's end.

Makan Delrahim, Paramount's Chief Legal Officer and architect of the merger strategy, delivered a keynote address, asserting that the Ellison family's purchase of Warner Bros. would enhance competition and be a significant benefit for the creative sector.

Delrahim explained, "This transaction allows us to increase production, offering more movies, shows, and content to audiences." He added that this expansion would create additional job opportunities, particularly in Southern California, which has seen production move to other regions.

He acknowledged that Paramount pursued Warner Bros. after Netflix withdrew, citing Paramount's need to compete in a market dominated by tech giants. Delrahim also criticized the potential Netflix deal, doubting it would have survived regulatory scrutiny due to Netflix's dominance in streaming.

Paramount still requires approval from Warner shareholders, the Justice Department, state attorneys general, and international regulators.

Delrahim stated, "This merger is a major victory for Los Angeles, California, and all communities that support filmmaking."

Tech billionaire Larry Ellison has personally pledged $45.7 billion in equity for the deal. Paramount will also assume over $60 billion in debt, raising concerns among Hollywood workers about possible layoffs and cost-cutting measures.

Attorney Ethan E. Litwin, a former counsel for TV networks, commented at the conference, "Paramount is spending $110 billion to eliminate a competitor. In a highly concentrated industry, removing a major rival reduces competition for projects."

Bonta did not confirm whether he would attempt to block the merger.

State Attorneys General Take Action

The Progressive State Leaders Committee, affiliated with the Democratic Attorneys General Association, recently hired Rohit Chopra, former director of the Consumer Financial Protection Bureau and ex-Federal Trade Commission commissioner, as a senior advisor. He will help coordinate antitrust enforcement efforts among state leaders, including Bonta.

Chopra remarked at Thursday's conference, "The federal government is simply not enforcing the law. Our states are now the last line of defense."