It was in February, shortly after news broke that Paramount had won the bidding for Warner Bros. Discovery, that California Attorney General Rob Bonta drew a line in the sand:
On Monday, less than five months later, Bonta made good on his promise, leading a group of 12 state attorneys general to file suit against the $81 billion merger on antitrust grounds.
The suit suggests the combined Paramount and Warner Bros. Discovery will “extinguish competition” in the industry and specifically harm cable television licensing (the combined company would own more than 50 cable channels, plus CBS) and wide-release theatrical distribution.
On the movies front, the suit states:
The merger will end this competition permanently. The likely result is higher prices, lower quality, and less content for film… diminished competition will also harm distributors of cable television programming and consumers. These harms will be felt throughout the country, including in Plaintiff States.
Theatres, especially, will pay the price. With fewer film distributors, theatres will likely be forced to pay the remaining distributors a greater split of their revenues. Theatres will likely face more onerous caps on discounts and on the number of complimentary tickets they can offer viewers. And theatres will likely receive fewer new releases from distributors, who will face less competition and therefore have less incentive to invest in new, creative, and distinctive theatrical films.
Theatergoers, in turn, will suffer. With film distributors siphoning a greater portion of box office revenue, theatres will likely be forced to raise the price for a trip to the theatre and slash investments in the viewer experience (e.g., less investment in larger screens, luxury seating, concessions). Theatergoers will therefore likely face higher prices and degraded quality. With more stringent caps on discounts and complimentary tickets, theatergoers will likely pay full price more often. And with less investment in theatrical releases, the breadth of films available to theatergoers will likely decline.
I’ve written it several times before, but it bears repeating for the cheap seats and doubters: A merger of any two studios is bad for many, including but not limited to:
- Entertainment makers
- Entertainment consumers
- The city and the community
- Movie theaters
- Cable television subscribers
And now that you mention it, it’s bad for democracy, too, in the consolidation of information distribution.
Does all that add up to a good antitrust argument?
I’m not an antitrust expert, but I spent yesterday reading comments from a bunch of them, and where they come out on this question depends largely on where they start on antitrust and consolidation in general. Experts’ takes on this suit split over where they stand vis-à-vis the Trump administration’s attitude toward giving favored companies a free hand.
I have read people I trust who take these things very seriously saying this suit is very solid, and others say it’s completely frivolous — including Paramount. In a statement, the company said Bonta’s suit “reflects a fundamentally flawed application of the antitrust laws and is wrong on both the facts and the law.”
Ultimately, this is a question for courts, not pundits, to decide.
But I cling to the foolish belief that you don’t have to be an antitrust attorney to have an opinion about a deal that could have devastating consequences for our community, at a time when we don’t have room for many more.
And based on what I’m seeing out there, I’m not alone in this worldview.
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