Paramount Skydance faces lawsuit as 12 state attorneys general seek to block Warner Bros. Discovery acquisition

The Paramount Skydance Warner Brothers merger has been hit with lawsuit from 12 different states. According to a CNBC report, California Attorney General Rob Bonta is leading the group of 12.

A group of 12 state attorneys general filed a lawsuit on Monday (13 July) challenging Paramount Skydance’s proposed acquisition of Warner Bros. Discovery

The legal action comes just weeks after federal regulators concluded that the merger was unlikely to harm competition, setting up a fresh battle over one of the entertainment industry's biggest consolidation efforts.

California leads coalition challenging Paramount Skydance deal

According to CNBC, the lawsuit was filed on Monday by a coalition of 12 state attorneys general, with California Attorney General Rob Bonta leading the challenge.

The states argue that the proposed acquisition raises antitrust concerns and are seeking to prevent the transaction from proceeding through the courts.

Representatives for Paramount and Bonta did not immediately respond to requests for comment.

The legal challenge had been anticipated, with CNBC's David Faber reporting earlier that the lawsuit was expected to be filed on Monday.

Paramount Skydance merger cleared by US Department of Justice

The lawsuit comes despite the transaction already receiving approval from the US Department of Justice's Antitrust Division in mid-June.

After reviewing the proposed acquisition, federal officials concluded that the merger did not present sufficient competition concerns to justify blocking it.

"The Division has completed its analysis of the proposed merger of Paramount and Warner Bros. and determined based on the evidence received in its investigation that the transaction is not likely to result in harm to competition or American consumers," the department said in its determination.

The merger has also received approval from several international jurisdictions, although regulators in the European Union are continuing their assessment.

The European Commission has set a provisional deadline of July 22 for its review after Paramount submitted concessions intended to address regulatory concerns.

What Paramount Skydance & Warner Bros. Discovery merger would create

If completed, the acquisition would create one of the world's largest media companies by bringing together Paramount's film studio, television assets and streaming business with Warner Bros. Discovery's entertainment portfolio.

The combined company would unite Paramount+, HBO Max, CBS, MTV and BET with Warner Bros. Discovery brands including CNN and TNT.

Paramount chief executive David Ellison has previously said Paramount+ and HBO Max would eventually operate as a single streaming platform following completion of the transaction.

The merger would also create the largest portfolio of television networks in the US, significantly expanding the company's reach across broadcast, cable and streaming businesses.

Shareholder approval secured but scrutiny continues

Warner Bros. Discovery shareholders approved the proposed acquisition in April, with Ellison subsequently stating during an earnings call that the deal remained on course to close by September.

However, the transaction has attracted sustained scrutiny from lawmakers in both the US and Europe, including questions surrounding aspects of the financing behind Paramount's offer.

The latest lawsuit adds another layer of uncertainty as the companies work towards completing the acquisition.

Hollywood concerns over consolidation and jobs

The proposed merger has sparked debate across Hollywood, with critics warning that further consolidation could reduce competition, result in fewer film releases and lead to job losses across the entertainment sector.

Ellison has sought to reassure the industry, promising that the combined studio would release 30 films annually while maintaining a commitment to protecting jobs.