Paramount and WBD face 12-state antitrust lawsuit to block merger

The lawsuit shifts the burden of proof to Paramount and WBD to justify the merger through verifiable consumer benefits, a high legal bar that threatens the Q3 2026 closing timeline. By focusing on upstream labor and midstream content libraries, regulators are attacking the structural economics of the legacy studio model rather than just retail pricing. If the states secure an injunction, the merger would likely require significant divestitures, such as the CBS broadcast network or the Paramount film studio, to address concentration. The case also tests the 'Attention Economy' defense, which argues that legacy studios must merge to survive competition against tech titans like Netflix, Alphabet, and Amazon. Watch for whether the Northern District of California grants the requested temporary restraining order.

The state-led lawsuit, filed in July 2026 by California Attorney General Rob Bonta, comes just one month after the U.S. Department of Justice closed its investigation and cleared the transaction. While federal regulators historically signal the final hurdle, individual states retain independent authority under the Clayton Act to challenge deals they believe harm local residents or specific industries. Similar state-level interventions occurred in the broadcast sector, such as when a coalition successfully stalled the $6.2 billion merger between Nexstar Media Group and Tegna earlier in the year, according to reporting from CBS News in July 2026.

Paramount and WBD must also navigate a shifting regulatory landscape abroad. Per Reuters and Variety in June 2026, the U.K.’s Competition and Markets Authority (CMA) opened its own investigation into the deal, with Culture Secretary Lisa Nandy suggesting a public interest intervention due to media plurality concerns. To appease European regulators, Paramount has already agreed to exit certain film distribution ventures with Universal. Domestically, the 2023 DOJ and FTC Merger Guidelines updated HHI thresholds to consider markets with a score above 1,800 as 'highly concentrated,' a policy shift that provides the mathematical foundation for the states' current legal challenge.