Public Interest Groups Urge State Attorneys General to Challenge Paramount-WBD Merger

A coalition of 28 public interest groups have published an open letter to state attorneys general urging them to “expeditiously investigate” and use their full range of legal authority to block Paramount’s pending $110 billion takeover of Warner Bros. Discovery.

“The combined corporate behemoth would likely result in higher consumer costs from anti-competitive consolidation, layoffs of American workers, and a sharp
reduction in consumers’ ability to access news and entertainment programming, streaming services, and other products,” the letter states. “This merger also raises serious First Amendment concerns, given Skydance’s recent acquisition of Paramount, including CBS News, which reportedly began almost immediately to censor journalists’ news reporting to conform to President Donald Trump’s preferred viewpoints.”

The group noted that the consolidation of HBO Max and Paramount+ into a single platform would give more market power to the combined entity and increase prices for consumers, which “clearly violates” the Federal Trade Commission and Department of Justice’s 2023 merger guidelines.They added that the deal would reduce the number of major film studios from five to four, creating a more concentrated market following Disney’s 2019 acquisition of 20th Century Fox, which could violate Section 7 of the Clayton Act.

Additionally, they said that a combined Paramount-Warner Bros. would have “significant leverage over workers, from actors to writers to producers to creators,
which would also substantially lessen competition for labor” and pose a “substantial anti-competitive concern in the news media market.”

Control over both CBS News and CNN would also present “enormous threats to free speech and the freedom of the press,” the group said, arguing that the networks would “fall under the control of billionaires who are seemingly willing and able to suppress credible reporting, tamp out dissent, and slant national
news to favor the administration.”

They claimed the Ellison family “already appear to have demonstrated an appetite to censor points of view they disagree with at media properties they own,” citing the delay of a “60 Minutes” investigation of El Salvador’s CECOT prison and the cancellation of “The Late Show with Stephen Colbert.” They also called out Trump publicly inserting himself into the merger negotiations, Ellison’s attendance at the president’s State of the Union address and reports that Ellison promised to make sweeping changes to CNN and the financial backing in Paramount’s previous bids from three Middle Eastern sovereign wealth funds.

“We urge you to immediately investigate this merger and take any and all appropriate legal action. In the face of relentless corporate consolidation and rising prices, states have a critically important role to play in ensuring a competitive marketplace, even when federal antitrust regulators fail to act,” the letter concluded. “At a time when the freedom of the press and access to fact-based news are being threatened in unprecedented ways—and the president’s allies are consolidating huge swaths of the media and online ecosystem—this
merger threatens to take our nation further down the path of autocratic regimes like Hungary and Russia. With President Trump having weaponized independent agencies and antitrust enforcers to do his political bidding, it is essential that states fill the void and aggressively protect consumers.”

The letter is signed by the Center for American Progress, American Economic Liberties Project, Democracy Defenders Fund, American Federation of Teachers (AFT), Center for Digital Democracy, Clean Elections Texas, Common Cause,
Connecticut Citizen Action Group, Democracy Matters, Free Speech For People,
Freedom of the Press Foundation, Future Film Coalition, Greenpeace USA, Groundwork Action, Indivisible, International Documentary Association, Kaze Design, League of United Latin American Citizens (LULAC), Media and Democracy Project, Money Out Voter In (MOVI), National Action Network, National Hispanic Media Coalition, National Organization for Women, The National Vote, Open Markets Institute, Public Citizen, Public Knowledge and
Secure Elections Network.

The letter comes as California Attorney General Rob Bonta has warned that Paramount-WBD is “not a done deal” and said the state would be “vigorous” in its own review of the transaction. He also said he’s “in conversation” with his AG colleagues about a combined Paramount-WBD. 

Experts told TheWrap that, while they expect Bonta to lead a lawsuit by a group of Democratic state AGs, a legal challenge would face an uphill battle if the merger receives support from the Department of Justice and could be weakened if the combined entity offers concessions to close its deal.

In addition to needing approval from WBD shareholders and the DOJ, the Paramount deal must also be approved by international regulators including the European Commission and U.K. Competition and Markets Authority. An EC spokesperson told TheWrap it has not been “formally notified” of the Paramount-WBD deal, though the media giant said it has already begun pre-notification discussions. Meanwhile, a CMA spokesperson declined to speculate on cases it will or won’t look into outside of a formal investigation.

Executives have said they would not sell or spin off Paramount-WBD’s cable assets and Ellison promised that CNN would maintain “editorial independence.”

“Really, who we really want to talk to is the 70% of Americans [and] around the world that identify as center-left and center-right,” Ellison told CNBC on Thursday. “We want to be in the truth business and we want to be in the trust business, and that’s not going to change.”

When asked about layoffs, Ellison said the company will “absolutely have to rationalize the overall corporate overhead of the company,” but that it’s “not the primary driver” of deal’s over $6 billion in expected cost savings. Instead, he said those synergies would come areas such as from combining the technology behind HBO Max and Paramount+ and the reviewing its real estate footprint.

“We are not going to sell either lot. Those are iconic and we are going to absolutely hold onto those,” he said.

Paramount expects the Warner Bros. merger to close by Sept. 30.  If it takes longer than that, shareholders will get a 25 cent per share “ticking fee” — or approximately $650 million — each quarter until closing. If it doesn’t close due to regulatory matters, WBD will get a $7 billion termination fee.

The post Public Interest Groups Urge State Attorneys General to Challenge Paramount-WBD Merger appeared first on TheWrap.