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Challenge to Paramount-Warner Bros. Merger Focuses on Theaters, Basic Cable by David Dayen
Twelve states sued to block the $110 billion merger between Hollywood studios Paramount and Warner Bros. on Monday, arguing that the combination would mean lower revenues for theater owners and cable distributors, and therefore higher prices for moviegoers and cable subscribers.
The case, filed in the Northern District of California by the state’s attorney general Rob Bonta and 11 other state attorneys general across the country, went for the easiest and most explicable theory of harm: The combined studio would have the leverage to force higher splits with theaters for the biggest films, and the highest fees from cable companies for carriage of their networks.
Combined, the merged company would have a 27 percent market share of box office revenue based on the last four years of receipts, and a 27 percent market share of basic cable based on carriage fees (calculated by overall viewership, the number is even higher at 34 percent). The merger would consolidate Hollywood into four major studios that would control 85 percent of wide-release films and 93 percent of so-called “tentpole” releases from which theaters make most of their money. Just two companies (the new Paramount–Warner Bros. and Disney) would control 59 percent of basic cable. One out of every four dollars in basic cable and theatrical releases would flow to this merged company.
“With this lawsuit, California and our sister states are fighting for free and fair markets, not rigged markets. America has no kings in government or our economy,” said Bonta in a statement.
The lawsuit kicks off what will surely be a contentious process that has already been marked by Paramount’s threats to leave California and upend long-settled antitrust precedents. But in the states’ corner is a “ticking fee” that raises Paramount’s merger price each day that the acquisition hasn’t closed after October 1. The ticking fee, which accumulates daily, translates to roughly $7.2 million per day, starting in less than three months. A merger challenge can take years to resolve.
The case, filed in the Northern District of California by the state’s attorney general Rob Bonta and 11 other state attorneys general across the country, went for the easiest and most explicable theory of harm: The combined studio would have the leverage to force higher splits with theaters for the biggest films, and the highest fees from cable companies for carriage of their networks.
Combined, the merged company would have a 27 percent market share of box office revenue based on the last four years of receipts, and a 27 percent market share of basic cable based on carriage fees (calculated by overall viewership, the number is even higher at 34 percent). The merger would consolidate Hollywood into four major studios that would control 85 percent of wide-release films and 93 percent of so-called “tentpole” releases from which theaters make most of their money. Just two companies (the new Paramount–Warner Bros. and Disney) would control 59 percent of basic cable. One out of every four dollars in basic cable and theatrical releases would flow to this merged company.
“With this lawsuit, California and our sister states are fighting for free and fair markets, not rigged markets. America has no kings in government or our economy,” said Bonta in a statement.
The lawsuit kicks off what will surely be a contentious process that has already been marked by Paramount’s threats to leave California and upend long-settled antitrust precedents. But in the states’ corner is a “ticking fee” that raises Paramount’s merger price each day that the acquisition hasn’t closed after October 1. The ticking fee, which accumulates daily, translates to roughly $7.2 million per day, starting in less than three months. A merger challenge can take years to resolve.
https://prospect.org/2026/07/14/challenge-to-paramount-warner-bros-merger-focuses-on-theaters-basic-cable/]
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