US states could sue next week to block Paramount’s $110bn Warner Bros deal

A group of US states could sue as soon as next week to block Paramount’s $110 billion acquisition of Warner Bros. Discovery, two people familiar with the matter told Reuters, opening a fresh front against a deal that federal regulators have already waved through.

The threat lands weeks after the Justice Department cleared the merger without conditions, and it could still delay Hollywood’s biggest consolidation in years.

The states are concerned the combination would harm competition, according to the Reuters report by Dawn Chmielewski and Jody Godoy, published on 8 July. The sources did not specify which type of competition worried officials.

Advocacy groups and some state regulators have warned that subscription prices for streaming services could rise, and that the merged company might cut jobs and offer a narrower range of films, news, and other content.

Those concerns echo objections raised by actors, writers, and cinema owners since the takeover was announced, with cinema operators in particular arguing that a combined studio could green-light fewer films.

The transaction would fuse two of Hollywood’s four major studios, and its scale is part of what has drawn regulators’ attention. Under the agreed terms, Paramount is paying $31.00 a share in cash for Warner Bros. Discovery, a price that values the target at roughly $110 billion including debt.

California has taken the lead. Attorney General Rob Bonta is investigating whether the transaction violates US laws against mergers that unlawfully harm competition, and in early June Reuters reported that California, New York, and other states were preparing a joint lawsuit.

The state action reflects a wider shift, with attorneys general stepping up their scrutiny of large mergers as federal antitrust enforcers adopt a more business-friendly stance.

A spokesperson for Bonta’s office declined to comment, and Paramount did not immediately respond to Reuters.

A court challenge would carry real costs for Paramount, which is expected to shoulder around $80 billion in debt once the transaction closes. Any delay would only add to that burden.

Chief executive David Ellison, the son of Oracle co-founder Larry Ellison, has already agreed to pay Warner Bros.

Discovery shareholders a 25-cent-per-share “ticking fee” if the deal does not close before October, amounting to roughly $650 million in cash each quarter. The clause gives both sides a strong incentive to complete the tie-up quickly.

The deal itself has moved fast. Paramount Skydance, led by Ellison, prevailed in a bidding war for Warner Bros. Discovery after Netflix walked away, and the streaming rival later authorised a $25 billion share buyback as it refocused on its own strategy.

Federal clearance came last month, when the Justice Department closed an eight-month review and concluded the merger was “not likely to harm competition or American consumers”.

State attorneys general can still sue to block a deal even after Washington signs off, and they have grown bolder about doing so.

Other officials have also moved. Oregon’s attorney general has sought a 60-day delay and asked a judge to compel Paramount to comply with a records request, while in Britain the culture secretary has said she is “minded to intervene” in the takeover.

For now the timeline is procedural. If the multistate suit is filed next week, it would set up a court fight that could push the closing past October and into the window where the ticking fee bites.

A federal judge would ultimately decide whether to grant an injunction blocking the merger while the case is heard, and states have won such fights before even when Washington declined to act.

Paramount, meanwhile, has been laying operational groundwork, merging the technology behind Paramount+, Pluto TV, and BET+ onto a single streaming stack in preparation for absorbing HBO Max. Whether the states can slow that plan will now depend on the courts.