Twelve US states have started legal proceedings to block the merger of two Hollywood giants - "Warner Bros." and "Paramount". The lawsuit was filed in California. The state's Attorney General Rob Bonta says that if "Paramount" absorbs "Warner Bros." as expected, it will lead to higher prices, poorer quality and fewer films and television productions.
According to the general lawsuit, the merger also poses a threat to cinemas in the US, as the elimination of competition between two of the country's largest studios will put them under additional stress. According to the lawsuit, the deal with which "Paramount” will acquire "Warner Bros."”, violates competition rules and must be stopped. They are citing a law that prohibits mergers if they could harm competition.
Wrong reading of the law?
"Paramount" defended itself by arguing that the lawsuit does not take into account the reality of competition in the entertainment industry and is based on the incorrect application of antitrust law, ARD writes. At the same time, competition inspections are still underway outside the United States, including in Europe.
In June, the US government approved the billion-dollar deal without any conditions. The Justice Department concluded that the merger would not harm competition or American consumers - both in the television and streaming businesses, as well as in film production. According to the "Wall Street Journal" The acquisition was approved by the ministry's leadership before the department's competent lawyers could give a recommendation on the matter.
What are they saying in Europe?
The UK's Culture Secretary, Lisa Nandy, intends to ask the UK's media and competition regulators to review the $110 billion deal. Nandy said she "intends" to instruct the country's media regulator, Ofcom, to examine the mega-deal's impact on media diversity, and to ask the Competition and Markets Agency to investigate whether the proposed deal poses a problem.
The European Union (EU) has also expressed concerns about the deal. However, Paramount submitted new commitments to the European Commission (EC) on June 30, but no specific details were given. The commission extended the preliminary decision deadline from July 7 to July 22 to give itself time to evaluate the changes.
Last week, reports emerged that "Paramount" would withdraw from the film distribution joint venture United International Pictures with Universal Pictures to facilitate approval for the deal.
Why is this deal so important to the Trump administration?
Behind "Paramount" is the family of software billionaire Larry Ellison, known as a supporter of US President Donald Trump, ARD recalls. Initially, "Netflix" had already reached an agreement with "Warner Bros." to acquire the streaming and studio businesses of this industry giant last year. "Paramount" However, he did not give up and submitted a higher offer for the entire Warner Bros. Discovery concern - including television channels such as CNN. The deal is now worth about $111 billion. Trump's critics in the US fear that under the umbrella of Paramount, CNN could lose its editorial independence.
"Paramount" is led by Larry Ellison's son - film producer David Ellison. With the acquisition of "Warner Bros. Discovery", he seeks to strengthen his influence in Hollywood. "Paramount" was among the smaller players in the industry. To "Warner Bros." include, among other things, the DC superhero universe with Superman and Batman, film series such as "Harry Potter", as well as a strong streaming business based on the pay channel HBO.
Author: Nils Damptz (ARD)