Paramount Skydance agrees to delay merger until June 2027

Paramount's California movie and TV studios are in Hollywood. Warner Bros.' movie and TV studios are about 26 miles away in Burbank. Both companies also own streaming services and TV networks, including Paramount Skydance's CBS.

California Attorney General Rob Bonta is leading a coalition of 12 state attorneys general, all Democrats, who are suing to stop the merger.  Speaking at a July 13 press conference with the famous Hollywood sign on the hill behind him, Bonta said the $110 billion deal would extinguish competition.

"It would result in higher prices, lower content quality, and fewer movies and TV shows,” said Bonta. “Movie theaters, basic cable TV distributors, and audiences on every sofa and in every movie seat would feel the impact of this unlawful merger.” 

On July 20, Judge Araceli Martínez-Olguín of U.S. District Court for the Northern District of California granted a temporary restraining order sought by the attorneys general to prevent the merger while the lawsuit plays out in court.

Arizona Attorney General Kris Mayes is among the plaintiffs. Mayes said she is grateful that the merger is now on hold while the court fully reviews the issues.

“Thousands of Arizonans work in the movie theater industry and many small businesses in our state benefit economically from the foot traffic driven by movie attendance,” Mayes told The Center Square in an email. “This proposed merger would threaten those jobs and local economies around Arizona by reducing competition that would lead to fewer movies released each year.”

The Writers Guild of America, a union representing TV and movie writers, made similar arguments in its own lawsuit against the Warner Bros. Discovery and Paramount Skydance merger.

“With fewer competitors, the merged Paramount-Warner Bros. entity would have both the incentive and the ability to lower costs by suppressing writers’ wages and reducing output,” the WGA complaint stated. “Writers will be paid less and have fewer employment opportunities.”

Mayes added that this merger is “clearly a violation of our antitrust laws which are designed to ensure competition and a fair marketplace that benefits all Arizonans.”

Wayne Winegarden, a senior fellow in business and economics at Pasadena, Calif.-based Pacific Research Institute, is not concerned about the merger. Winegarden added that the Department of Justice and the European Commission, a regulatory body, signed off on the deal before the lawsuits were filed.

“Now you have state AGs completely overstepping their authority, adding another regulatory problem,” Winegarden told The Center Square.

Winegarden said this could cause problems for other companies considering mergers.

"All of this just adds time delays, risks that you're going to have to pay a breakup fee,” said Winegarden. “This increases the risks involved in any transaction not being approved.”

In February, Paramount Skydance paid Netflix $2.8 billion to clear the way for Paramount Skydance's acquisition of Warner Bros. Discovery. Netflix originally offered an $83 billion bid to purchase Warner Bros. Discovery, but decided against trying to match Paramount Skydance's $110 billion offer.

Paramount Skydance also agreed to pay a separate $7 billion breakup fee to Warner Bros. Discovery if the merger does not happen.

The Center Square reached out to Paramount Skydance and Warner Bros. Discovery for comment, but did not hear back before publication time.

Winegarden, who believes the studios will still make films and hire people for production, said the lawsuits rely on an outdated view of the media industry, which is rapidly evolving.

“The world evolves,” said Winegarden. “If you don't evolve with it, you know, people always forget the actual minimum you can get paid is zero."