California officials are preparing to scrutinize Paramount’s proposed acquisition of Warner Bros. Discovery, a $110 billion transaction that could reshape the entertainment industry and carry significant implications for jobs and competition in the state.
State Attorney General Rob Bonta said Thursday that his office has already opened an investigation into the deal and will conduct a “vigorous” review. His comments came hours after Paramount prevailed over Netflix in a months-long contest to acquire control of the iconic Hollywood studio, according to Reuters.
“As the epicenter of the entertainment industry, California has a special interest in protecting competition,” Bonta said in a post on social media platform X on Friday.
Paramount’s victory followed an increased offer that ultimately persuaded Warner Bros.’ board to back its bid. Earlier in the process, the company had presented what directors considered a weaker proposal. However, Paramount succeeded in rallying political resistance among Republicans in Washington against Netflix’s competing bid, per Reuters.
The deal’s path at the federal level may prove smoother. Paramount’s political connections within the Trump administration are widely expected to help secure regulatory approval in Washington, according to Reuters. In contrast, California’s Democratic leadership — including Governor Gavin Newsom and Bonta — could present the most formidable challenge to the merger.
Newsom, who is viewed as a potential 2028 presidential contender, has positioned himself as a prominent opponent of President Donald Trump. Bonta has repeatedly taken legal action against the Trump administration over policies ranging from clean energy initiatives to health funding and pipeline projects.
Any delay in closing the transaction could increase its cost. Paramount has committed to paying Warner Bros. shareholders a quarterly “ticking fee” of 25 cents per share beginning in October if the deal remains pending, underscoring the company’s expectation of a swift conclusion.
Concerns in California center heavily on potential job losses. Paramount has projected $6 billion in cost “synergies” from the merger — a term often associated with significant staff reductions, restructuring, and supplier consolidation. Such measures could ripple across the state’s entertainment workforce and related businesses.
“We are confident that this transaction is indeed pro-competitive and look forward to continued constructive engagement with regulators around the world, including state attorneys general,” a Paramount spokesperson said. A spokesperson for Warner Bros. declined to comment.
Related: Netflix Withdraws From Warner Bros Bid as Paramount Emerges With ‘Superior’ Offer
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Analysts at TD Cowen warned in a note Thursday that state-level efforts to block the merger are “very likely,” while adding that “approval from federal regulators seems likely given the political environment,” according to Reuters.
U.S. Senator Adam Schiff, a California Democrat, argued that the concerns raised about Netflix’s failed bid apply equally to Paramount’s. “What was true for Netflix is still true now for Paramount,” Schiff said Thursday, urging that the proposal undergo “the highest levels of scrutiny.”
Labor organizations in Hollywood have also voiced opposition. The Writers Guild of America, which represents thousands of film and television writers, told the U.S. Senate that a Paramount takeover would threaten employment. The union noted that Warner Bros. scrapped $2 billion in content after its 2022 merger with Discovery, and that Paramount’s recent merger with Skydance resulted in 1,000 layoffs, according to Reuters.
Academy Award-winning actor Mark Ruffalo also weighed in, calling on state attorneys general to examine how further consolidation could weaken competition and reduce wages. “There are lots of agents in Hollywood who can tell you how past mergers and consolidations have hurt their clients and business. There is lots of talent that can tell you the same,” Ruffalo wrote on X.
Bonta responded on the platform, saying, “I’m in conversation with my AG colleagues about Paramount/Warner Bros.”
California has a track record of challenging major corporate combinations. After completing its investigation, the state could file suit to block the deal if it determines the merger would unlawfully limit competition. A court ruling against the transaction could halt it outright, though the companies would retain options to appeal, negotiate a settlement, or abandon the agreement.
In recent years, California co-led a multistate challenge to T-Mobile’s acquisition of Sprint. Although the states were unsuccessful in court, California secured a settlement that recovered costs and included temporary commitments on jobs and consumer pricing. The state also joined the Federal Trade Commission and other states in successfully blocking Kroger’s proposed acquisition of Albertsons.
At the same time, Bonta’s office has criticized certain federal settlements that allowed mergers to proceed. California is currently part of a coalition opposing a Justice Department agreement that would permit Hewlett Packard Enterprise’s $14 billion acquisition of Juniper Networks, according to Reuters.
To bolster its oversight capacity, the attorney general’s office has expanded its competition enforcement team in recent years under antitrust chief Paula Blizzard, a veteran regulator with prior experience at the Justice Department and the Federal Communications Commission.
Source: Reuters