Paramount-Warner Bros Discovery’s $110B Merger Hits A New Hurdle As California, 11 Other States Sue To Block It

• California Attorney General Rob Bonta led a coalition of attorneys general from 11 other states in challenging the proposed transaction.
• The coalition argues the combined entity would control nearly one-third of U.S. theatrical film distribution and nearly one-third of basic cable programming.
• The lawsuit also alleges that the merger would result in higher prices, lower-quality programming, and fewer choices for movie theaters, basic cable distributors, and audiences nationwide.

Paramount Skydance Corp.'s (PSKY) proposed $110 billion acquisition of Warner Bros. Discovery Inc. (WBD) has hit a fresh legal hurdle after California and 11 other states filed a lawsuit seeking to block the deal on antitrust grounds.

The lawsuit, filed in the U.S. District Court for the Northern District of California, alleges that the proposed transaction violates Section 7 of the Clayton Act, arguing that it would substantially lessen competition in several entertainment markets.

Paramount Skydance shares were up more than 3% in Monday morning’s trade, while Warner Bros. Discovery shares rose about 4%.

What The Lawsuit Alleges

California Attorney General Rob Bonta led a coalition of attorneys general from 11 other states in challenging the proposed transaction. The coalition alleges the deal would combine two of Hollywood's five major film distributors and two of the five largest owners of basic cable channels, eliminating direct competition between the companies.

The coalition argues the combined entity would control nearly one-third of U.S. theatrical film distribution and nearly one-third of basic cable programming. The lawsuit also alleges that the merger would result in higher prices, lower-quality programming, and fewer choices for movie theaters, basic cable distributors, and audiences nationwide.

The attorneys general said the merger would substantially lessen competition in wide-release theatrical films, anticipated blockbuster releases, and the licensing of basic cable television channels. They contend that the loss of competition could lead to higher prices, fewer programming choices, and reduced incentives to produce new film and television content.

What The Coalition Wants From PSKY, WBD

The coalition has asked Paramount and Warner Bros. not to close the transaction until the judicial process is complete.

“If they do not agree, the coalition will be filing a temporary restraining order,” the attorneys general said in the statement.

Bonta said the proposed transaction would result in "higher prices, lower quality, and less content" for film and television, harming movie theaters, basic cable distributors, and audiences nationwide.

He also said consolidation would lead to fewer opportunities for stories to be brought to life and fewer ways for audiences to encounter different ideas and perspectives.

“With this lawsuit, California and our sister states are fighting for free and fair markets, not rigged markets. America has no kings in government or our economy,” Bonta said.

PSKY, WBD Merger Under UK Competition Watchdog Scanner

The proposed Paramount-Warner Bros. merger is also under scrutiny in the U.K., where the Competition and Markets Authority (CMA) opened an initial review last month.

The regulator is expected to decide by Aug. 7, 2026, whether the transaction raises competition concerns.

What Retail Investors Think Of PSKY Stock

Retail sentiment on Stocktwits around PSKY trended in ‘bullish’ territory at the time of writing.

PSKY stock is down 28% year-to-date, while WBD stock is down 4%. The State Street Communication Services Select Sector SPDR ETF (XLC) is up 6% over the past 12 months, while the iShares Core S&P 500 ETF (IVV) is up 20%.

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