State Attorneys General Challenge Paramount Merger With Warner Bros

Paramount CEO David Ellison faces a critical hurdle in completing a $110 billion acquisition of Warner Bros. Discovery as a coalition of 12 state attorneys general pursues an antitrust lawsuit to block the historic media merger.

Led by California Attorney General Rob Bonta, the state-level legal challenge represents the primary remaining obstacle after all global antitrust regulators, including the U.S. Department of Justice, granted approval for the transaction.

The legal fight could impose significant financial costs on media companies already experiencing market pressures. Despite a scheduled March trial date, Ellison remains confident the transaction will succeed, according to a person familiar with his strategy.

"The company believes strongly in this," said Jeffrey Kessler, lead trial attorney for Paramount.

Kessler added that the media firm was prepared to take the legal battle to the Supreme Court if needed to secure the merger.

Legal experts note that California regulators face little local pressure to compromise on the acquisition. Media veteran Tom Rogers stated that the home constituency in California strongly opposes the transaction, reducing incentives for state officials to settle.

"I think the whole issue there is, will the state AGs be interested in settling, and I'm not quite sure there's any real incentive for them to settle given the fact the California home constituency here is overwhelmingly against the transaction," said Tom Rogers, senior advisor to Versant Media Group.

To rally support, Ellison wrote an op-ed in The New York Times and offered theater exhibitors contracts guaranteeing 30 films annually with a 45-day theatrical window. Reports also surfaced that Paramount considered moving its headquarters to Tennessee, a move Bonta characterized as blackmail.

Bonta recently expressed willingness to hold out-of-court discussions, provided a settlement includes robust structural remedies, leading to subsequent meetings between both parties. Concurrently, public scrutiny has emerged regarding potential taxpayer costs across participating states if Paramount prevails in court, with total legal exposure estimated near $200 million across the 12 jurisdictions.