U.S. states sue to block $110bn Paramount Skydance-Warner Bros Discovery merger.

A coalition of 12 U.S. state attorneys general filed a lawsuit on Monday seeking to block Paramount Skydance Corporation's proposed $110 billion acquisition of Warner Bros. Discovery, arguing that the merger would substantially reduce competition in the entertainment industry.

The coalition is led by California Attorney General Rob Bonta and includes the attorneys general of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.

District Court for the Northern District of California, alleges that the merger violates Section 7 of the Clayton Act, which prohibits acquisitions that could substantially lessen competition or create a monopoly.

According to the complaint, competition would be harmed in three key markets: wide-release film distribution, blockbuster film distribution, and the licensing of basic cable television channels to distributors.

The legal challenge comes weeks after the U.S. Department of Justice approved the transaction, removing a major regulatory hurdle. Although the merger has also received approval in dozens of other countries, it still requires clearance from regulators in the United Kingdom and the European Union.

In a statement, Bonta said the merger would lead to higher prices, lower-quality programming, and fewer content choices, harming movie theaters, cable distributors, and consumers across the United States.

Paramount rejected the lawsuit, calling it "wrong on both the facts and the law," and argued that the states had misrepresented the competitive landscape of the modern entertainment industry.

The complaint alleges that, if completed, the merger would leave the combined company and Disney controlling approximately 60% of the market for anticipated top-grossing films. It also claims the merged company would control nearly one-third of the U.S. market for wide-release theatrical films and basic cable programming.

Paramount Skydance and its chief executive, David Ellison, maintain that the merger would strengthen competition and help preserve Hollywood's theatrical business model.

The close ties between David Ellison, his father Larry Ellison, and members of the Trump administration have also drawn scrutiny, with critics questioning whether the regulatory process favored the transaction despite concerns raised by actors, journalists, and several prominent politicians.