California Tests Its Antitrust Muscle In Hollywood

LOS ANGELES — For months, opponents of Paramount Skydance’s acquisition of Warner Bros. Discovery looked to California Attorney General Rob Bonta as their best hope of stopping a deal that would reset the entertainment industry and, critics fear, hand Donald Trump greater influence over a news giant he has long despised.

On Monday, Bonta delivered the legal challenge they had sought, filing a petition in federal court challenging the blockbuster deal on antitrust grounds. His complaint alleges that the merger violates a federal law that prohibits transactions that may substantially lessen competition.

Bonta’s lawsuit represents a major test of a blue state’s ability to exert regulatory power over a high-profile business deal that the president has signaled he wants completed — and a defining moment for an attorney general whose national profile has risen amid California’s many legal battles with Trump. It comes after the Justice Department’s Antitrust Division signed off on Paramount’s $111 billion acquisition in a decision announced last month. Among Warner Bros. Discovery’s assets is CNN, the network with which Trump has long feuded and said should be sold.

Speaking at a Monday morning press conference in the hills above Los Angeles — with the Hollywood Sign behind him — Bonta, a Democrat, laced into Trump when asked about the Justice Department's handling of the merger, saying the president's administration had "absolutely dropped the ball" and was "affirmatively making things worse," leaving his office to step in. But he also cast the conflict as part of a broader battle over the rule of law and corporate power.

“Antitrust enforcement is a check … on a president who's trying to handpick winners and losers, bypassing the law and the meritocracy that makes our economy thrive,” said Bonta, who was joined in the lawsuit by Democratic attorneys general from 11 other states, among them New York, Oregon and Massachusetts. “It's a check on the elite few who think they're above the law when they're not. No one is. No company is.”

Bonta, a Northern California politician who is poised to win reelection in November, is no stranger to closely watched antitrust litigation — his office is set to go to trial in January in a price-fixing case against Amazon. But the lawsuit seeking to block the Paramount-Warner Bros. merger could prove the biggest challenge of his tenure. That’s how Burbank Assemblymember Nick Schultz, whose district is home to Warner Bros., put it on Monday afternoon.

“This is by far the most high-profile litigation that he's ever undertaken,” said Schultz, who opposes the merger. “The world is watching, and I think that how he performs in this moment is going to be potentially very good or very bad for him — depending on whatever his future aspirations are. I tend to believe it's going to be very good, because I think we'll be effective in court. I know the AG personally, and he's going to fight for the people, and I think the people will see that.”

The merger has raised questions among those in the entertainment industry and beyond in part because it isfinancially backed by billionaire Larry Ellison — father of Paramount CEO David Ellison and a prominent Trump ally. Administration officials, including Defense Secretary Pete Hegseth — who in March said he wanted the younger Ellison to swiftly take over CNN — have made that preference clear. The mogul has strengthened his own ties to Trump in recent months, honoring him at a dinner in Washington in April.

While Bonta was holding his press conference, Ellison — who has been quietly working on a bipartisan bill to create a federal film tax incentive program — was coincidentally en route to Washington with Paramount chief legal officer Makan Delrahim for a long-planned dinner with 13 members of the House Ways and Means Committee to discuss advancing the legislation, according to a person familiar with the matter who was granted anonymity to describe the gathering.

Paramount said in a statement that Bonta’s complaint “reflects a fundamentally flawed application of the antitrust laws and is wrong on both the facts and the law.” The company vowed to fight the suit, saying that it would “demonstrate that this challenge is inconsistent with sound competition policy and the competitive realities of the media marketplace.”

“Delaying this transaction will only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood and cost California tens of thousands of entertainment jobs,” the company added.

Antitrust litigation doesn’t always produce clear winners and losers: One possible outcome, experts say, is a settlement involving concessions from Paramount. Bonta could, for example, come to a deal with the company that includes a commitment not to lay off a certain number of employees or to dispose of an asset.

There is recent precedent in California for the state attorney general using a merger challenge to extract concessions. During Trump’s first term, as the Justice Department weighed the merger of T-Mobile and Sprint, a coalition of state attorneys general that included California’s Xavier Becerra sued to stop it. The states did not prevail, but the litigation led to a settlement in California that contained assurances tied to retail jobs in the state.

Typically, state attorneys general coordinate antitrust reviews with their federal counterparts, sharing the burden of litigation. Bonta said at the press conference that the lawsuit, filed against both Paramount and Warner Bros., would cost $20 million, require 20 attorneys, and has necessitated bringing on outside counsel. “These are expensive cases … they require experts, economists to review the markets and do the analysis,” he said, adding that the defendants have brought on “an army of high-powered private attorneys.”

But Bonta’s office has a large roster of attorneys with antitrust experience, said Jennifer Dixton, a former assistant chief at the Justice Department’s antitrust division. “California hired people from DOJ as they were leaving when the second Trump administration took over,” said Dixton, now a lecturer at the UCLA School of Law. “They were seeking to hire people from DOJ and FTC — I think that they really were interested in building their antitrust expertise.”

Hollywood observers have predicted that combining Paramount Skydance with Warner Bros. Discovery — whose assets include a namesake film and television studio and HBO Max — could lead to fewer opportunities for actors, writers and other creative workers, and is likely toresult in significant layoffs.

Bonta’s lawsuit alleges that if Paramount were to merge with Warner Bros. Discovery, the combined company would reduce competition in the markets for theatrical film distribution — including the release of anticipated blockbuster films — and the licensing of basic cable television channels. The merger would create a company controlling “nearly one-third of theatrical motion pictures, and nearly one-third of basic cable programming,” a statement from Bonta’s office said.

“We looked hard at this case, the facts, the law, the impact on Americans, on price, on quality, on competition, on choice, and all arrows pointed in one direction, which is we felt absolutely compelled and obligated under the law and the facts to file the lawsuit that we're filing today,” the attorney general said.

For months, a wide array of elected officials in California have expressed concern about the deal — and cheered on Bonta. In early May, 34 members of Congress wrote a letter to the attorney general thanking him for his “full and robust review” of the transaction.

Rep. Laura Friedman, a Democrat whose Burbank district also is home to Warner Bros., was a signatory to the letter and told POLITICO she was pleased that Bonta has taken legal action. “In normal times, we'd have federal regulators that were taking on this role of examining the legality and the impacts of this mega merger, but we don't have that right now,” she said. “We don't have a federal regulator that's willing to stand up for citizens, so it's falling on the attorneys general.”

The White House and the Justice Department did not immediately respond to requests for comment.

The prospective deal has received regulatory approval inmore than 20 countries — among them Australia, Germany and Brazil — and is expected to close by the end of the third quarter. Paramount’s statement said that the deal — which would allow the company to integrate its namesake streaming service with HBO Max to create a new content platform boasting more than 200 million subscribers — would create “a stronger competitor against dominant streaming and technology platforms who have harmed the market for theatrical exhibition and jobs in the entertainment industry.”

Bonta, who became attorney general in 2021, has positioned himself at the forefront of California’s fight with the Trump administration. Since the start of the president’s second term, Bonta’s office has sued the federal government dozens of times. The attorney general has also clawed back billions of dollars in frozen federal funds and secured more than 30 preliminary injunctions against the Trump administration.

Gov. Gavin Newsom, a likely presidential contender and frequent Trump combatant, convened a special legislative session early last year to send an additional $25 million to California’s Department of Justice in preparation for the state’s anticipated legal battles.

Warner Bros. employees have worried about their job security ever since Paramount prevailed over Netflix in a contentious bidding war in late February. Many have pointed to the aftermath of Ellison's Skydance's roughly $8 billion acquisition of Paramount Global last year, which was followed by large-scale layoffs. In doing so, some have looked to Bonta for help.

One veteran Warner Bros. worker, granted anonymity to describe private conversations, told POLITICO in March that she and her colleagues had been discussing the merger on what she called a “praying-to-our-savior Rob Bonta text chain.” Amid fears over job cuts, they wondered if the attorney general could “do anything to save us.”

It was, she said, their “small shred of hope.”

Nicole Norman and Blake Jones contributed to this report.