It seems unlikely that a merger of Hollywood studios would be a matter for U.S. states to get involved in. But this week, a dozen states did just that, suing to stop a studio merger in court as anticompetitive and a violation of antitrust law.
“Twelve state attorneys general filed a lawsuit Monday challenging Paramount Skydance’s $110 billion acquisition of Warner Bros. Discovery, arguing that the combined Hollywood giant would damage economic competition in the entertainment and media industries,” NBC’s Daniel Arkin wrote this week.
Skydance founder David Ellison purchased Paramount Pictures last year, in a deal President Donald Trump opposed until Paramount settled his meritless lawsuit against the company. Then, when Netflix offered to acquire Warner Bros. Discovery (WBD), the newly merged Paramount Skydance submitted a more generous bid, which the streamer declined to match.
Progressives have opposed the Paramount–WBD deal. Over 5,000 people in the entertainment industry signed an open letter expressing concern. Sen. Elizabeth Warren (D–Mass.) called the proposed merger “an antitrust disaster,” with California Attorney General Rob Bonta saying it “must receive a full and robust review.”
The Department of Justice Antitrust Division announced last month that it would allow the deal to go through, as the merger “is not likely to result in harm to competition or American consumers.”
But states can also sue to stop mergers. “The merger of Warner Bros and Paramount is not a done deal and remains under investigation by my office,” Bonta wrote on X.
In the lawsuit filed this week, Bonta was joined by the attorneys general of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.
“This proposed $110 billion merger, the largest in Hollywood history, would extinguish competition between Paramount and Warner Bros. and inflict substantial harm on movie theatres, basic cable distributors, and, ultimately, audiences nationwide,” the filing alleges. Among other things, it warns, “The merger combines two of the nation’s five major film distributors, leaving only four to control over 85 percent of all wide-release theatrical films in the United States.”
In a press release, a Paramount Skydance spokesperson countered that the lawsuit “reflects a fundamentally flawed application of the antitrust laws and is wrong on both the facts and the law.” The company added that the U.S. was just one of two dozen countries and regulatory agencies that “have concluded that the merger will not pose any threat to competition”
Indeed, despite the doomful rhetoric, the merger would not establish a monopoly that requires government intervention. Not only that, the lawsuit threatens to keep studios from innovating for a changing audience.
For one thing, a combined Paramount–WBD wouldn’t even be the largest studio. In 2025, Disney sold more movie tickets than any other studio—27 percent of all tickets sold, slightly more than Paramount and WBD netted collectively. And in 2023, Universal Pictures released more films than any other studio—more, even, than Paramount and WBD combined.
Ellison has pledged that a combined Paramount–WBD will release 30 films per year, a level of output that one study estimated would generate $12.7 billion in economic activity, including $2.7 billion in direct studio spending. On the other hand, some theater owners suspect that when factoring in the costs of the merger and WBD’s debt load, Ellison is being too ambitious.
But even apart from those concerns, no government should be able to demand how many films a studio produces, or doesn’t.
“The entertainment industry doesn’t exist simply to hawk movies and TV shows like they’re any other commodity,” Bonta wrote at Variety after filing the lawsuit. “It exists to tell stories, spark ideas and curiosity, inspire and inform, and open our eyes to new perspectives that we may never have encountered otherwise.”
That’s a wonderful sentiment; and yes, movies and TV can do all those things. But that has nothing to do with the government’s role in the process.
It’s not the government’s job to tell studios what films to make, how to make them, or how many to make. That goes for a Republican administration targeting a company for having too many nonwhite actors in its projects, and it goes for Democratic state officials trying to keep two studios separated in the hope that they’ll make more movies.
For that matter, the traditional studio system seems to be dying anyway, with both Paramount and WBD just trying to adapt.
For most of the last century, there were between six and eight major studios at any given time. There are currently five, and if this merger goes through, there will be four: Disney, Sony, Universal, and the new Paramount–WBD conglomerate. But there are also more boutique studios now than ever before. Upstarts like A24 and Neon have each been around less than 15 years, and yet their films make lots of money and win major awards, even against the larger studios’ output.
In fact, it’s never been easier for someone without a billion-dollar budget to compete against studios that do. As Alex Weprin wrote last year in The Hollywood Reporter, social media content creators “are building their own supersized studio system as Hollywood cuts back.”
Two of this year’s biggest box office successes—Obsession and Backrooms—were directed by YouTubers, who parlayed their online success into highly profitable, critically lauded feature films. “As studios and TV networks have shed jobs over the years, more entertainment workers are applying their expertise at major YouTube creator-led businesses, which have continued to grow their audiences,” the Los Angeles Times reported this week.
Even after purchasing Paramount, Ellison reportedly felt the newly merged company was still not big enough to compete with streamers like Netflix and Disney. That’s why he wanted Warner too.
And although Ellison has reiterated his pledge to make 30 films a year, touting that Paramount doubled its output from eight last year to 15 this year, that studio warned shareholders in May to expect “significantly lower theatrical revenue year-over-year due to lower average box office revenue per film across more releases in 2026.”
“Antitrust enforcement,” Bonta wrote, is “a check on billionaires currying favor with the president so he’ll do their bidding and hand-pick winners and losers.” Ironically, Bonta’s lawsuit tries to do the same, delegating what studios can do and how they should do it.
