A coalition of 12 state attorneys general led by California filed an antitrust lawsuit Monday seeking to block Paramount Skydance's proposed acquisition of Warner Bros. Discovery, CNBC reports.

The lawsuit, filed in U.S. District Court for the Northern District of California, argues the combination would reduce competition, raise prices for consumers, and shrink entertainment choices.

California Attorney General Rob Bonta said the proposed merger would produce "higher prices, lower quality, and less content for film and television," harming movie theaters, cable distributors and consumers.

The proposed combination has also faced criticism from Hollywood.

Opponents argue it could lead to fewer theatrical releases and significant job losses throughout the entertainment industry.

If completed, the deal would unite Paramount Pictures and Warner Bros., along with the Paramount+ and HBO Max streaming services.

Paramount CEO David Ellison has previously said the two streaming platforms would eventually operate as one service.

The combined company also would own the nation's largest collection of television networks, bringing together CBS, MTV and BET with Warner Bros. Discovery properties, including CNN, TNT and other cable channels.

33% CONTROL OF TV & FILM

According to the lawsuit, the merged company would control nearly one-third of U.S. film production and almost one-third of basic cable programming.

If the companies refuse, the attorneys general said they will seek a temporary restraining order to prevent the transaction from closing before the case is decided.

Warner Bros. Discovery shareholders approved the merger in April, and Ellison recently said the companies remain on track to complete the deal by September.

Ellison has pledged that the combined studio will release about 30 movies a year and has said protecting jobs remains a priority.

Stephen Moore, commenting on the deal as a member of a pro-M&A economic forum, said: “The entertainment industry is undergoing one of the most dramatic transformations of any sector in the American economy. Paramount and Warner Bros. are competing every day against Netflix, Amazon, Apple, Disney, YouTube, TikTok and other enormously well-capitalized global platforms.”

Moore added: “Bringing these companies together would create a stronger American competitor capable of investing in more content, more innovation and more jobs.”

Moore is a member of "Unleash Prosperity Now," which last month released a report in support of the mega merger. The group also supports reduced regulation, low or no tariffs, and a competitive entertainment marketplace.

MAKINGS OF A DEAL

The Paramount-Warner Brothers transaction traces its roots to last September, when Ellison turned his attention to Warner Bros. Discovery shortly after Paramount completed its merger with Skydance.

After several bids and a formal sale process, Warner Bros. Discovery initially agreed to sell its film studio and streaming assets to Netflix.

Paramount later launched a hostile bid, revised its offer and ultimately reached an agreement to acquire all of Warner Bros. Discovery for $31 a share after Netflix abandoned its transaction.

The acquisition also drew scrutiny from lawmakers in the United States and Europe, including questions surrounding foreign financing tied to Paramount's offer.

In mid-June, however, the Justice Department's Antitrust Division cleared the deal.

"The Division has completed its analysis of the proposed merger of Paramount and Warner Bros. and determined based on the evidence received in its investigation that the transaction is not likely to result in harm to competition or American consumers," the department said.

The merger has since won approval from several international regulators.