With a judge in Oakland Country set to hear arguments for and against a temporary restraining order on Paramount’s planned merger with Warner Bros. Discovery, the David Ellison-led company said State AG’s motion for a temporary restraining “presents one of the weakest merger challenges in modern antitrust history.”
“Plaintiffs seek to take the extraordinary step of preventing Paramount Skydance Corporation and Warner Bros. Discovery, Inc. from closing their $110 billion, industry-transforming merger, yet they cannot come close to establishing a likelihood of success” in the case, Paramount said in its opposition filing to the TRO motion by the plaintiffs — a dozen Attorneys General led by Rob Bonta of California. “The reason is simple: the merger is procompetitive, not anticompetitive.”
The AGs filed the antitrust lawsuit in federal court in the Northern District of California on Monday. The hearing is set for Friday.
The merger has DOJ and most – although not all — regulatory approvals in hand and the Ellisons had planned to close the deal in the third quarter. A TRO and preliminary injunction could certainly delay that.
Paramount has insisted and continued to do so in the filing that the combination “will produce more high-quality content for consumers; it will incentivize investment in job-creating film production; it will stabilize basic cable television (which is gravely threatened by cord cutting); and it will increase the output of theatrical releases in a challenged entertainment landscape. The merger will also create a more formidable competitor to the largest streaming services—run by well established companies like Netflix, Amazon, and Disney.”
The AGs’ suit contends instead that the merger will stifle competition and harm consumers and the industry. It focuses on concentration in three areas – wide theatrical releases, blockbuster films, and cable networks.
Paramount called these three “purported relevant markets in which they claim the merger will substantially lessen competition” as “gerrymandered market definitions” and argued that plaintiffs’ data doesn’t “accurately reflect the competitive significance of the merger because of several market dynamics, especially ease of expansion by rivals.”
In theatrical distribution markets, for instance, Par writes that low barriers to expansion by existing competitors including Universal, Disney, Amazon MGM, Sony, Lionsgate, A24, and Neon, “make Plaintiffs’ concentration figures irrelevant and ensure that competition will remain vigorous” with little impact on negoatiting terms with theaters owners.
In cable, the company contends that Paramount and WBD channel lineups are complements, not substitutes.
It also focused on streaming, which is not part of the lawsuit, saying the merger would bring the combined company closer to parity with larger platforms and encourage investment.
“Plaintiffs’ extraordinary request for a temporary restraining order against the Paramount-Warner Bros. merger should be denied,” the filing said.
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