A major crisis is brewing in the American media industry, one that could turn the tables on Hollywood. A group of US state authorities, led by California and New York, is preparing a large-scale antitrust lawsuit. Its goal is to block one of the most significant mergers in the industry's history: the acquisition of Warner Bros. Discovery (WBD) by Paramount Skydance. The value of this deal is estimated at an astronomical $110 billion.

Why are federal regulators silent?

The initiative comes specifically from regional authorities, not the federal center. This is explained by a change in the political climate: federal regulators, including the US Department of Justice under the Donald Trump administration, are demonstrating a significantly more lenient attitude towards major corporate mergers. States, fearing market monopolization, have decided to take control of the situation to prevent the formation of a media giant that could dictate terms to the entire market.

Three main risks for the industry

Opponents of the deal and prosecutors highlight several critical threats that would arise from the merger of two of the four leading Hollywood studios:

  • Reduced competition: The merger of Warner Bros. and Paramount Pictures would lead to excessive consolidation of the film production market, leaving viewers with fewer choices.
  • Pressure on cinema distribution: Representatives of cinema chains are sounding the alarm: a monopolist would have too many levers of influence. This threatens a reduction in the number of available blockbusters and worsening conditions for the cinemas themselves.
  • Risk to jobs: Hollywood actors' and writers' unions are opposing the deal, fearing mass layoffs during restructuring. Furthermore, reduced competition for talent could negatively impact wages and working conditions in the media industry.

Arguments of defenders and promises

For their part, representatives of Paramount Skydance argue that blocking the merger would be a mistake that would only strengthen the dominance of the streaming platform Netflix. Company head David Ellison is trying to allay fears by voicing specific commitments to maintain the operational independence of the structures.

"I promise to keep both film studios as separate brands and release at least 30 films a year for theatrical distribution," Ellison stated, trying to convince regulators that the balance in the market will be maintained.

Financial consequences and the deal's "timer"

The news of the preparation of the court proceedings has already triggered a sharp reaction on the stock exchanges. Paramount shares plummeted by 6.7%, while Warner Bros. securities fell by 3.6%. Investors are clearly worried about the uncertainty.

The situation is exacerbated by strict contract terms. If the transaction is not completed before autumn (September–October), Paramount is obliged to pay shareholders penalty sanctions of about $6.9 million daily for each day of delay. This creates colossal pressure on the management of the companies.

The European factor

The problem is not limited to the US alone. The companies' logos are also under the scrutiny of European regulators. Antitrust authorities of the European Union are already reviewing the legality of the merger of the media giants. The Brussels decision, which could become a decisive factor, is expected by July 7.

At the time of publication, official comments from the US Department of Justice, the administrations of the states of California and New York, as well as from Netflix management regarding the impending antitrust lawsuit have not been received. The world awaits the verdict that will determine the future of Hollywood for years to come.