Julius Young — Founder & Editor-in-Chief, Vantage
The attorneys general filed. The deal is still closing. Here is why the states will lose and what it means when they do.
Twelve state attorneys general filed suit this week to block the $110 billion merger of Paramount and Warner Bros. Discovery. It is the most significant legal challenge the deal has faced since it was announced in February. It will almost certainly fail.
The history of media antitrust enforcement in the United States is largely a history of deals that got blocked in press conferences and closed in courtrooms. The AT&T-Time Warner merger survived a full DOJ trial in 2018. Disney's Fox acquisition cleared despite controlling concerns that would make the current complaint look modest. The courts have consistently been reluctant to apply structural remedies to content businesses, because content is not a fungible commodity. HBO and Paramount+ compete for subscribers, but so does Netflix, Apple TV+, Amazon, Disney+, Peacock, and a dozen others. The market definition that would make this merger look dangerous is one regulators have never successfully argued.
What the lawsuit will accomplish is a delay, and delays at this scale are not trivial. Every month the deal remains in limbo is a month that integration planning stalls, talent deals go unsigned, and the creative community operates under uncertainty. The twelve states may be right that the merger is bad for competition. They are almost certainly wrong that they can stop it. The consolidation logic that produced this deal does not pause for litigation. It accelerates through it.
What changes on the other side of the merger is the question worth asking. Not whether it closes, but what the entertainment industry looks like when three or four companies control the overwhelming majority of premium content, the platforms that distribute it, and the data that determines what gets made next. Read more in The Merger That Will Decide What Hollywood Looks Like For the Next Decade.