California Attorney General Announces Investigation into $111bn Media Merger
California Attorney General Rob Bonta has declared that the proposed $111 billion merger between Paramount Skydance and Warner Bros Discovery is "not a done deal" and will face rigorous regulatory scrutiny from state authorities. The announcement comes just hours after Netflix withdrew from its own planned takeover bid, signaling growing concerns about consolidation in the entertainment industry.
Regulatory Hurdles and Economic Concerns
In a statement posted on social media platform X, Bonta emphasized that the California Department of Justice has opened an official investigation into the potential merger. "These two Hollywood titans have not cleared regulatory scrutiny," Bonta stated. "We intend to be vigorous in our review." The deal would require approval from multiple regulatory bodies, including the U.S. Justice Department's antitrust division and European authorities.
The merger poses significant risks to California's economy, particularly regarding employment in the entertainment sector. Paramount has identified approximately $6 billion in potential cost "synergies," which industry analysts note typically translates to substantial layoffs, reduced supplier networks, and increased pressure on contractors. This follows similar concerns that emerged during Netflix's earlier bid for the company.
Corporate and Political Reactions
Paramount CEO David Ellison expressed satisfaction with Warner Bros Discovery's board unanimously affirming the "superior value" of Paramount's offer, which he claimed delivers better value, certainty, and faster closing for shareholders. Ellison, whose father is Oracle co-founder Larry Ellison, a known ally of former President Donald Trump, made these comments as reports emerged that Warner Bros Discovery had agreed to the acquisition during a global town hall meeting.
The proposed merger has drawn criticism from prominent political figures, including Senator Elizabeth Warren, who characterized it as "an antitrust disaster threatening higher prices and fewer choices for American families." Warren raised questions about Netflix CEO Ted Sarandos' recent White House visit shortly before the company abandoned its takeover plans, suggesting potential political influence in the regulatory process.
Industry and Union Opposition
Concerns extend beyond political circles into the entertainment industry itself. Actor Mark Ruffalo publicly called for state attorneys general to collaborate in addressing how the merger could "kill competition in the industry and drive down wages, and product quality for consumers." Bonta responded that he is already in "conversation with my AG colleagues about Paramount/Warner Bros."
The Writers Guild of America has submitted written testimony to the U.S. Senate highlighting the merger's potential negative impact on jobs. The union noted that Warner Bros canceled $2 billion in content following its 2022 merger with Discovery, while Paramount's recent merger with Skydance resulted in approximately 1,000 layoffs. These precedents have heightened concerns about further consolidation in an industry already experiencing significant restructuring.
As the investigation proceeds, California's regulatory review will focus on whether the merger would create an anti-competitive monopoly, reduce consumer choice, and negatively affect employment in one of the state's most important economic sectors. The outcome could set important precedents for future media industry consolidation.
