Attorneys general from multiple US states are expected to file a lawsuit as early as Monday to challenge Paramount's proposed acquisition of Warner Bros. Discovery.
The legal action, to be brought by a coalition including California Attorney General Rob Bonta, is anticipated to seek to block the merger on antitrust grounds.
This deal would combine two historic film studios—Paramount and Warner Bros.—along with the streaming platforms Paramount+ and HBO Max. Paramount CEO David Ellison previously stated that the two streaming services would be merged into one following the combination.
It would also create the largest portfolio of US television networks, integrating Paramount's broadcast network CBS and pay-TV channels like MTV and BET with Warner Bros. Discovery's channels such as CNN and TNT.
The merger was approved by Warner Bros. Discovery shareholders in April, and Ellison indicated on a recent earnings call that it is on track to close by September.
The transaction has faced intense scrutiny from lawmakers in both the US and Europe, including concerns over foreign financing involved in Paramount's offer. In mid-June, the US Department of Justice cleared the merger, removing federal antitrust concerns.
In its decision, the Justice Department stated it had completed its analysis of the proposed combination and determined, based on evidence received during the investigation, that the deal was unlikely to harm competition or US consumers.
The merger has also received approval from several global jurisdictions and is progressing toward a potential closing.
However, the European Union is still reviewing the deal for approval, with a new provisional deadline set for July 22. The European Commission noted in a public filing this month that Paramount has submitted proposed concessions to try to alleviate concerns about the transaction.
Hollywood has previously expressed worries about the merger, citing potential reductions in the number of film releases and possible job losses in the industry. Ellison has committed to a slate of 30 films per year from the combined studio and stated his dedication to protecting jobs.
Ellison first set his sights on Warner Bros. Discovery last September. The company's initial attempt to acquire it came just weeks after Paramount completed its merger with Ellison's Skydance, followed by multiple offers and a formal sale process.
Warner Bros. Discovery ultimately signed a deal to sell its film studio and streaming assets to Netflix. However, Paramount launched a hostile takeover bid and subsequently revised its offer. Netflix walked away from the deal, and Paramount eventually reached an agreement to acquire all assets of Warner Bros. Discovery for $31 per share.