U.S. States Prepare Antitrust Lawsuit to Block Paramount-Skydance Merger with Warner Bros. Discovery

U.S. states are preparing a lawsuit to block Paramount Skydance's planned $110 billion acquisition of Warner Bros. Discovery. The legal challenge would argue the merger reduces competition, lowers wages, and leads to job losses in the entertainment industry.

Officials in multiple states have expressed concern over the deal's potential impact on competition and content distribution. The group of states preparing the lawsuit includes California and New York, Reuters reported. Additional states are expected to join.

The states have not yet filed the lawsuit but are preparing the legal documents. The transaction would create one of the largest entertainment conglomerates in the United States. Warner Bros. Discovery shareholders approved the sale in April after Netflix dropped out of the auction.

Under the proposal, Warner investors would receive $31 a share. The combined company would have to contend with $79 billion in deal debt and plans $6 billion in cuts. Thousands of people who work in the TV and film industry signed an open letter opposing the acquisition, saying it would lead to fewer production jobs.

One organizer said the consequences would be felt nationwide, from job losses to consumers losing access to independent voices. Raymond James equity analysts said in a note on Thursday that they still believe the deal is likely to close.