If the deal succeeds, it may cause more damage than benefit to the entertainment industry.
Although it would seem unlikely that a merger of Hollywood studios would fall under state intervention, twelve states ended up stepping in this week, taking the case to court to block the deal on grounds of anticompetitiveness and violations of antitrust law.
“Twelve state attorneys general filed a lawsuit Monday challenging Paramount Skydance’s $110 billion acquisition of Warner Bros. Discovery, arguing that the combined Hollywood giant would damage economic competition in the entertainment and media industries,” NBC’s Daniel Arkin reported this week.
David Ellison, founder of Skydance, acquired Paramount Pictures last year, in a deal that President Donald Trump opposed until Paramount resolved his meritless lawsuit against the company. Then, when Netflix floated a bid to buy Warner Bros. Discovery (WBD), the freshly merged Paramount Skydance submitted a more generous offer, which the streamer declined to match.
Progressives have resisted the Paramount–WBD arrangement. More than 5,000 people within the entertainment sector signed an open letter voicing concerns. Senator Elizabeth Warren (D–Mass.) described the proposed merger as “an antitrust disaster,” while California Attorney General Rob Bonta urged that it endure a “full and robust review.”
The Department of Justice Antitrust Division announced last month that it would permit the deal to proceed, arguing that the merger “is not likely to result in harm to competition or American consumers.”
Yet states retain the option to challenge mergers. “The merger of Warner Bros and Paramount is not a done deal and remains under investigation by my office,” Bonta posted on X.
In the suit filed this week, Bonta was joined by the attorneys general of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.
“This proposed $110 billion merger, the largest in Hollywood history, would extinguish competition between Paramount and Warner Bros. and inflict substantial harm on movie theatres, basic cable distributors, and, ultimately, audiences nationwide,” the filing asserts. It also warns, “The merger combines two of the nation’s five major film distributors, leaving only four to control over 85 percent of all wide-release theatrical films in the United States.”
In a press release, a Paramount Skydance spokesperson responded that the lawsuit “reflects a fundamentally flawed application of the antitrust laws and is wrong on both the facts and the law.” The company added that the U.S. was only one of two dozen countries and regulatory bodies that “have concluded that the merger will not pose any threat to competition.”
Indeed, despite the alarming rhetoric, the merger would not create a monopoly that would necessitate government intervention. Moreover, the lawsuit could impede studios from innovating for a changing audience.
For one thing, a merged Paramount–WBD would not even be the largest studio. In 2025, Disney sold more movie tickets than any other studio—about 27 percent of all tickets—slightly more than the combined totals of Paramount and WBD. And in 2023, Universal Pictures released more films than any other studio—more even than Paramount and WBD together.
Ellison has pledged that a combined Paramount–WBD would release 30 films per year, a pace a study estimated would generate $12.7 billion in economic activity, including $2.7 billion in direct studio spending. By contrast, some theater owners worry that when you account for merger costs and WBD’s debt, Ellison may be setting expectations too high.
But apart from these concerns, no government should dictate how many films a studio makes, or doesn’t.
“The entertainment industry doesn’t exist simply to hawk movies and TV shows like they’re any other commodity,” Bonta wrote in Variety after filing the lawsuit. “It exists to tell stories, spark ideas and curiosity, inspire and inform, and open our eyes to new perspectives that we may never have encountered otherwise.”
That’s a commendable sentiment; indeed, movies and television can fulfill all of those roles. Yet that has little bearing on the government’s role in this process.
It’s not the government’s job to instruct studios on which films to produce, how to produce them, or how many to produce. This stands whether one is facing a Republican administration pressing a company over the number of nonwhite actors in its projects, or Democratic state officials trying to keep two studios apart in the hope they will generate more films.
Moreover, the traditional studio system seems to be declining anyway, with Paramount and WBD merely trying to adapt to new realities.
For most of the last century, there were between six and eight major studios at any given time. Today there are five, and if this merger proceeds, there would be four: Disney, Sony, Universal, and the newly formed Paramount–WBD entity. Yet boutique studios proliferate now more than ever. Upstarts like A24 and Neon have each existed for under 15 years, and yet their films earn substantial money and garner major awards, even against the output of larger studios.
In fact, it has never been easier for someone without a billion-dollar budget to take on the big studios. As Alex Weprin noted last year in The Hollywood Reporter, social media content creators “are building their own supersized studio system as Hollywood cuts back.”
Two of this year’s biggest box-office wins—Obsession and Backrooms—were directed by YouTubers who translated their online fame into highly profitable, critically acclaimed feature films. “As studios and TV networks have shed jobs over the years, more entertainment workers are applying their expertise at major YouTube creator-led businesses, which have continued to grow their audiences,” the Los Angeles Times reported this week.
Even after acquiring Paramount, Ellison was reportedly convinced the newly merged company still wasn’t large enough to compete with streaming giants like Netflix and Disney. That is why he sought Warner as well.
And although Ellison has reiterated his commitment to producing 30 films annually, noting that Paramount increased its output from eight films last year to 15 this year, the studio warned shareholders in May to expect “significantly lower theatrical revenue year-over-year due to lower average box office revenue per film across more releases in 2026.”
“Antitrust enforcement,” Bonta wrote, is “a check on billionaires currying favor with the president so he’ll do their bidding and hand-pick winners and losers.” Ironically, Bonta’s lawsuit appears to enact a similar prerogative, dictating what studios can do and how they should operate.
