LAS VEGAS (FOX5) — Nevada Attorney General Aaron D. Ford filed a lawsuit Sunday challenging the $110 billion acquisition of Warner Bros. by Paramount, his office announced.
Ford joins a coalition of 11 other attorneys general in asking a federal court to block the deal.
The lawsuit was filed in U.S. District Court for the Northern District of California. It alleges the merger violates Section 7 of the Clayton Act, which prohibits mergers that may substantially lessen competition or tend to create a monopoly.
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“When competition disappears, consumers are the ones who pay the price,” Ford said. “This merger threatens to reduce choices, drive up costs and diminish the variety of movies and television programming available to families. Nevadans deserve a marketplace where companies are incentivized to compete to deliver diverse entertainment, competitive prices and more innovation.”
The complaint alleges the combined company would control roughly one-third of theatrical motion pictures and roughly one-third of basic cable programming in the United States. The attorneys general allege the merger would lessen competition in three markets:
- Wide release theatrical film distribution: Warner Bros. and Paramount are two of the five major film distributors and would combine for approximately 27% of the market. After the merger, three distributors would control 75% of wide-release films, and four distributors — the combined company, Disney, Universal and Sony — would control 86%.
- Anticipated top-grossing theatrical film distribution: The combined company would control more than 30% of anticipated blockbuster films. Four distributors would control 93% of that market.
- Basic cable television channel licensing: Warner Bros. is the second largest and Paramount is the third largest in this market. A merger would give the combined company a 27% share.
The lawsuit contends that movie theaters rely on competition between Paramount and Warner Bros. to secure competitive prices and terms.
It also argues that cable and satellite distributors use the two companies as leverage against each other in negotiations — a dynamic the merger would eliminate.
The attorneys general have asked Warner Bros. and Paramount not to close the merger until after the judicial process concludes.
If the companies do not agree, the coalition said it will seek a temporary restraining order.
Ford is joined in the lawsuit by the attorneys general of California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oregon and Washington.
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