Union sues to stop $110B Paramount-Warner Bros. 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 states. “Writers will be paid less and have fewer employment opportunities.”

WGA’s lawsuit was filed Tuesday in the U.S. District Court for the Northern District of California. That is the same court that will hear a similar lawsuit from Democratic attorneys general in 12 states, including California.

Warner Bros. and Paramount are iconic parts of Southern California's movie and TV history. Warner Bros. is based in Burbank, and Paramount is about 26 miles away in Hollywood.

"If Paramount succeeds in buying Warner Bros., the merged firm will be the largest buyer of original film and television programming in the United States,” said WGA West President Michele Mulroney in a joint press release. “This would eliminate competition in an already consolidated industry, threatening the livelihoods of entertainment workers and the creative diversity of TV and film."

WGA East President Tom Fontana said the guild will not stand idly by as Paramount “attempts to violate antitrust laws and deepen the contraction entertainment workers already feel” in today’s climate.

“This proposed combined entity would be the largest employer of writers, with tremendous power to suppress our wages, eliminate opportunities for emerging writers, cut jobs across the industry, and produce less programming, affecting the range of storytelling,” said Fontana in the joint press release.

Wayne Winegarden of Pacific Research Institute thinks the opposition is narrow and short-sighted. The institute is based in Pasadena, which is near Burbank and Hollywood.

In a phone interview Wednesday with The Center Square, Winegarden said blocking the merger could leave both Warner Bros. and Paramount as unviable, uncompetitive standalone entities. If they fail individually, Winegarden said it will result in far fewer jobs for writers than a merged, competitive company will offer.

"Clearly they're trying to kind of serve the interests of their members, but, you know, are the interests of the members aligned with the interests of consumers?” asked Winegarden, a senior fellow in business and economics at PRI. “That's an important question because all of this should always be on the consumer standard."

Winegarden went on to say that the entertainment industry and the broader economy must be allowed to evolve. Trying to freeze the industry in its old model will do more harm than good.

“If you stop the economy from evolving, you're going to stop growth in incomes and, you know, all the benefits that come with that," said Winegarden.

The California Department of Justice, led by Attorney General Rob Bonta, told The Center Square in an email that it welcomes enforcement partners in fighting for fair competition and looks forward to litigating this alongside WGA.

Michael Gates, a lawyer who's the Republican candidate for California attorney general, said Bonta is running for office and “jumping on this as an opportunity to make headlines” in an election year.

“He's trying to appear as though he’s taking on Big Business, but what he’s totally missing is that the federal government has already evaluated this merger, and the federal government under federal antitrust laws deems this merger as proper and nothing violative of antitrust law,” Gates told The Center Square during a phone interview Wednesday. “I know too that there is antitrust law in California. I actually had an antitrust case  that I litigated personally when I was the city attorney of Huntington Beach, so I understand this area.”

The U.S. Department of Justice’s Antitrust Division signed off on the deal on June 12. Regulators determined the union of Warner Bros. and Paramount would not stifle competition across television networks, streaming services or theatrical film distribution.

“It looks like he is going to lose in court with this challenge, but he doesn't care because again, it is an opportunity for him during his reelection campaign,” said Gates. “It's pure weaponization of the California Justice Department against big business, and honestly, it's just one more occasion in which our state leaders are driving big business out of California.”