Coalition Of Public Interest Groups Call For State Attorneys General To Challenge Paramount-Warner Bros. Discovery Merger

A coalition of public interest groups are calling on state attorneys general to try to block Paramount‘s proposed acquisition of Warner Bros. Discovery, claiming that it will increase consolidation to the point that it violates antitrust law.

The letter, led by the Center for American Progress Action Fund, is aimed at California Attorney General Rob Bonta and other state AGs. Bonta already said he would closely scrutinize the proposed transaction, and told Deadline that there has been interest from other states as well.

The letter emphasizes the horizontal nature of the merger, as the combination would reduce the number of major film studios from five to four. The groups claimed that it would create a “more concentrated market” following The Walt Disney Co.’s purchase of most of the 20th Century Fox assets in 2019.

Among other things, the public interest groups say that the merger presents “crucial antitrust and consumer cost questions,” pointing to the price increases for streaming services. Combining Paramount and Warner Bros., the wrote, “creates more market power” for further price hikes.

The public interest groups also wrote in the letter that Federal Trade Commission and DOJ merger guidelines “make clear that mergers raise a presumption of illegality when they significantly increase concentration in an already concentrated market. This includes the fact that a combined Paramount Warner Bros. would have significant leverage over workers, from actors to writers to producers to creators, which would also substantially lessen competition for labor. Finally, the combined entity would co-own CBS News and CNN, posing a substantial anti-competitive concern in the news media market.”

Among the other groups signing on to the letter were the American Economic Liberties Project, the Democracy Defenders Fund, the American Federation of Teachers, Common Cause, Freedom of Press Foundation, Future Film Coalition, Greenpeace USA, Indivisible, the International Documentary Association, the Media and Democracy Project, the National Action Network, the National Hispanic Media Coalition, The National Organization for Women, the Open Markets Institute, Public Citizen and Public Knowledge.

The Disney-Fox merger cleared the Justice Department and other regulators with relative ease, as some analysts pointed to the ability of the companies to point to a competitive landscape that also included Netflix and Amazon.

There’s also some expectation that the DOJ will not challenge the Paramount-WBD transaction, as the David Ellison-led company already cleared one aspect of the process, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Act.

In an interview with CNBC on Thursday, Paramount CEO David Ellison said that the deal was “pro-competitive. It’s pro-consumer. It’s good for the overall creative economy.”

“Basically, the creative ecosystem now has more places to sell and more scaled buyers and consumers now have more choices,” he said. He also said that they have met with state attorneys general of both parties.

When it comes to streaming, Ellison said, that the transaction will get a combination of Paramount+ and HBO Max to a scale that can compete. He said, “When you put Paramount+ and HBO Max together, you get to over 200 million, basically gross subscribers. That’ll come down a little bit, basically with the overlap, but it puts you in the position to be able to compete with the leaders in the industry.”