California Attorney General Pledges Rigorous Scrutiny of Paramount-Warner Bros Merger
California Attorney General Rob Bonta has declared that the proposed $111 billion merger between Paramount Skydance and Warner Bros Discovery is "not a done deal" and will face a thorough investigation by state authorities. This announcement comes shortly after Netflix withdrew from its own takeover plans, heightening regulatory concerns over the potential consolidation of Hollywood power.
Regulatory Hurdles and Economic Risks
In a post on X, Bonta emphasized that the merger has not cleared regulatory scrutiny, with the California Department of Justice launching an open and "vigorous" review. The deal, which requires approval from U.S. and European regulators, including the U.S. Justice Department's antitrust division, poses significant risks to California's economy. Paramount has identified $6 billion in cost synergies, a move often associated with substantial layoffs, reduced supplier networks, and squeezed contractor terms, raising alarms about job losses in the state.
Political and Industry Backlash
The merger has sparked backlash from key political figures and industry groups. Senator Elizabeth Warren labeled the potential union an "antitrust disaster" that could lead to higher prices and fewer choices for consumers. She highlighted concerns about corruption within the Trump administration's Department of Justice, noting Netflix CEO Ted Sarandos' recent White House visit before the company's withdrawal. Additionally, actor Mark Ruffalo called for state attorneys general to collaborate, warning that the merger could stifle competition, lower wages, and degrade product quality.
Union Concerns and Historical Precedents
The Writers Guild of America has voiced strong opposition, citing historical precedents where mergers led to significant job cuts. For instance, Warner Bros canceled $2 billion in content after merging with Discovery in 2022, and Paramount's merger with Skydance resulted in 1,000 layoffs. In written testimony to the U.S. Senate, the union argued that a Paramount takeover of Warner Bros would further harm employment in the media sector.
Corporate Perspectives and Deal Details
Paramount CEO David Ellison expressed satisfaction that the Warner Bros board unanimously affirmed the superior value of Paramount's offer, which promises shareholders "superior value, certainty, and speed to closing." Ellison, son of Oracle co-founder Larry Ellison and a close ally of Donald Trump, leads the bid. Reports from Reuters and Deadline indicate that Warner Bros Discovery agreed to the acquisition during a global town hall, though neither company has officially confirmed the deal to the Guardian.
As the investigation unfolds, Bonta confirmed he is in discussions with other state attorneys general to address the merger's broader implications. The California Department of Justice has not yet responded to requests for comment, leaving the future of this monumental media consolidation uncertain amid mounting regulatory and public scrutiny.
