After months of speculation, 12 State Attorneys General have filed a joint-lawsuit against Paramount amidst their proposed Warner Bros merger on Monday. It is being led by California. Initial reports that they were planning on filing suit this week came from the New York Times on Sunday.
This comes on the heles of Oregon dropping their lawsuit against the merger. Oregon’s suit, however, focused on the federal investigation into the merger rather than the merits of the merger, which would have shifted the legal focus to a much weaker case. Not to mention, the current situation of Oregon’s state funding meant that this would be a very unpopular allocation of taxpayer money to their constituents. To make the suit more affordable, they have joined the class-action with other states, which focuses on two things:
The consumer aspect: this merger the way it’s proposed would take ample choice away from the consumer as to where their view goes, whether it be in news with outlets such as CNN, children’s media with channels such as Cartoon Network, or movies, with one less studio offering tentpole blockbusters, being absorbed by a company with a significant market share in all of those avenues. The three things they’re suing under all fall under the Clayton Act, and that it’ll take competition away from cable and television, movie studios, and theatrical distribution. “The suit argues that the combined company will control 27% of the wide-release theatrical distribution market, 30% of the submarket comprising “anticipated blockbuster films,” and 27% of the basic cable bundle,” an article in Variety states. “The states argue that such consolidation will harm theaters and cable and satellite providers that rely on competition among distributors.”
The workforce aspect: taking away a major studio takes away millions of jobs from the local economies of the states.
While this won’t likely end the merger, it can do a myriad of things, including:
Prolong the deal, forcing the Ellison’s to pay their quarterly fee of $650M. With the Ellison’s money tied up in an Oracle stock that’s tanking, this guarantee may make it impossible for them to afford the deal should its closing window be delayed. Time is of the essence for the Ellison family.
Divest certain assets they’d acquire such as different movie studios, HBO, CNN, Cartoon Network, etc., ultimately re-structuring the deal. This precedent has been seen recently in similar mergers, notably Disney being forced to divest of the RSNs in their acquisition of 21st Century FOX, as owning the local sports channels alongside ESPN created concerns of monopoly.
Prolong the deal past mid-terms, bringing in new scrutiny at a federal level.
The Ellison’s have responded by saying that if this suit goes through, they will leave California. Unfortunately for the Ellison’s, this is obviously posturing on the surface, considering they’ll be in at least $80M in debt even with their recent consolidation, while dealing with a junk-grade stock forcing their interest to soar. Re-locating and buying lots in diverse geographical climates would run them billions more, money that they don’t have.
The other states involved beyond California and Oregon include: New York, Minnesota, Washington, Colorado, New Mexico, New Jersey, Connecticut, Massachusetts, Nevada, and Arizona.
“Consolidation here not only leads to higher prices — it also leads to fewer opportunities for important stories to come to life, and fewer ways for audiences to encounter stories, ideas, and perspectives beyond their own experiences,” California AG Rob Bonta said. “In this country, no one is above the law. 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.”
This is another in a long line of a Warner sale saga that DSR/CBC has covered extensively. You can read our early breakdown of it from April here, even if there have been more twists since that have changed the situation in certain aspects.
Jameus Mooney is an entertainment writer for Comicbook Clique, having covered the entertainment industry for years. You can follow him on Twitter here, and Letterboxd here. You can also listen to his horror podcast, The 2:17 Horror Podcast, at the DeathArts XIII YouTube channel.