Paramount faces suit from streaming subscribers seeking to block Warner Bros. deal

A handful of streaming subscribers filed a lawsuit Thursday seeking to block the $110 billion merger of Paramount Skydance and Warner Bros.

The plaintiffs — three current Paramount+ subscribers and two prospective subscribers — allege that they face increased prices and reduced viewing options as a result of the transaction.

Paramount expects to close the megadeal sometime in the third quarter, but could face opposition from the federal government or, more likely, from a coalition of states. Antitrust claims from private parties rarely prevail, but if a case can be made, the plaintiffs could force a monetary settlement on behalf of subscribers and moviegoers.

The lawsuit was brought by two Bay Area law firms in federal court in San Jose, Calif. The suit not only seeks an injunction blocking the Warner Bros. deal, but also seeks to force Skydance to divest itself of Paramount, which it acquired last year.

It also seeks triple damages under the provision of the Clayton Act that allows private parties to sue if they are harmed by an anticompetitive merger.

“Skydance’s nontrivial acquisition of Paramount Global and the proposed nontrivial acquisition of Warner Bros. Discovery reflect the same strategy of refusing to compete by building better products, investing, innovating, or winning customers through rivalry on the merits, but instead pursuing scale through consolidation that eliminates independent rivals and weakens the competitive constraints that protect consumers,” the suit states.

The suit also cites the Disney-Fox deal and the Amazon-MGM merger as evidence that the industry is facing a tide of consolidation that must be stopped.

“These acquisitions show an industry moving by successive combinations toward fewer independent rivals, exactly the consolidation backdrop that heightens the competitive threat posed by the next merger, even if the combined firm remains smaller than the largest platforms,” the lawsuit states.

The plaintiffs — Pamela Faust, Len Marazzo, Lisa McCarthy, Deborah Rubinsohn and Gary Talewsky — also assert damages as consumers of news and as regular moviegoers.

The lawsuit alleges that Skydance curried favor with the Trump administration in order to win approval of the Paramount deal, arguing that it has agreed to “align CBS News’s editorial posture” with the White House, and thereby “reduced the credibility, editorial independence, and investigative vigor of its reporting.”

The plaintiffs also allege that they will not have as many options at the cineplex if the Warner Bros. deal goes through.

“Plaintiffs allege that if Paramount’s proposed acquisition of Warner Bros. Discovery is consummated, the combined firm will reduce theatrical film output and narrow release slates, leaving moviegoers with fewer theatrical titles, less genre and budget variety, and fewer meaningful alternatives at local theaters, thereby diminishing the value of the theatrical experience by making trips to the movies less likely to offer appealing options and reducing the ability to substitute among titles when a particular film is unavailable, sold out, or unappealing,” the complaint asserts.

David Ellison, the Paramount Skydance CEO, has pledged to increase theatrical output and to release at least 30 films a year once the Warner Bros. deal is completed.

The company said in a statement Thursday that the lawsuit is “without merit.”

“The combination of Paramount and WBD will create a stronger competitor that is well positioned to serve as a champion for creative talent and consumer choice,” a company spokesperson said.

Source - Variety