A coalition of U.S. states is preparing what could become the most significant legal challenge yet to Paramount Skydance’s proposed $110 billion takeover of Warner Bros., setting the stage for a major antitrust confrontation that could reshape the future of Hollywood.
According to people familiar with the matter, California and New York are among the states expected to file a lawsuit in the coming weeks seeking to block the transaction. Additional states are believed to be weighing participation, though the final lineup has not been confirmed.
The potential lawsuit underscores a growing willingness among state attorneys general to take the lead on competition enforcement, particularly at a time when some state officials argue federal regulators have not been aggressive enough in policing large corporate mergers.
California Attorney General Rob Bonta has emerged as one of the deal’s most vocal critics. Soon after Paramount announced its successful bid for Warner Bros.—outmaneuvering a competing offer from streaming heavyweight Netflix—California launched an investigation into the transaction. Bonta recently criticized what he described as a retreat by federal antitrust authorities despite their greater resources.
California officials confirmed that their review remains active but declined to discuss possible litigation.
Investors reacted swiftly to reports of the looming legal challenge. Warner Bros. shares slipped during trading, while Paramount stock also moved lower as concerns grew over the merger’s timeline and regulatory hurdles.
Even if the states ultimately fail to stop the acquisition, a lawsuit could create significant delays. Courts have the authority to temporarily halt mergers while legal challenges proceed, potentially pushing completion dates back by months.
Such delays carry real financial consequences. Paramount has committed to compensating shareholders if the transaction remains unfinished beyond September. The company has previously disclosed that those payments would accumulate at roughly $6.9 million per day once the deadline passes.
Meanwhile, federal regulators are nearing a decision of their own. The U.S. Department of Justice has been reviewing the merger and reportedly sought detailed information earlier this year regarding its impact on film production, content licensing, streaming competition and movie theaters.
Supporters of the deal argue the merger would strengthen competition rather than weaken it. Paramount maintains that combining the two entertainment giants would create a stronger rival to dominant streaming players, particularly Netflix.
Company representatives have insisted the transaction benefits audiences and creators alike, while pledging to preserve both studio brands and maintain a robust theatrical slate of at least 30 films annually after the merger closes.
Opposition remains fierce across parts of the entertainment industry. Labor groups, actors and writers have warned that consolidation could lead to job reductions. Theater owners have also raised alarms, arguing that bringing together two of Hollywood’s most storied studios would reduce the number of independent suppliers available to cinemas and further concentrate power in the film business.
With federal regulators nearing a decision and state officials preparing for a courtroom battle, the future of one of the largest media mergers in recent memory may soon rest in the hands of judges.
