A group of US states, spearheaded by California and New York, is preparing to file a lawsuit aimed at stopping Paramount Skydance's proposed $110 billion purchase of Warner Bros, according to a report citing people familiar with the matter. The legal action is expected to be lodged in the coming weeks.
Those preparing the suit view the filing as a way for state authorities to take the lead on antitrust enforcement at a moment when federal agencies are seen as adopting a more business-friendly posture under the Trump administration. The report framed the states' effort as a counterweight to that federal direction.
Analysts referenced in the report said Paramount could face a potentially smoother path with federal antitrust reviewers because of the company's political ties. Specifically, they pointed to the relationship between Paramount CEO David Ellison and his father, billionaire Oracle co-founder Larry Ellison, who has developed ties with President Donald Trump.
The possibility of state litigation appeared to affect market prices. Warner Bros shares fell 3.6% on Friday afternoon after the report emerged, while Paramount's shares dropped 6.7%.
Paramount responded to the developing story through a company spokesperson, arguing that the proposed deal would increase competition. The spokesperson said opposing the transaction "means giving entrenched incumbents like Netflix an advantage they do not deserve." The statement added: "We will continue to fight against any attempt to derail a deal that plainly benefits consumers, creators, and the industry as a whole."
Context and implications
The reported state-led lawsuit would represent a significant intervention in one of the largest proposed media transactions. By moving at the state level, officials appear prepared to pursue a different enforcement posture than federal regulators, who are characterized in the report as leaning toward a business-favorable approach.
Market response
The share price moves cited in the report reflect immediate investor reaction to the prospect of additional legal and regulatory hurdles. Investors appeared to price in increased uncertainty for both Warner Bros and Paramount following publication of the report.
Limitations
The details available in the report are limited to the account of people familiar with the matter and statements released by Paramount. Further specifics about the states' legal claims or timing will depend on the filings once they are made public.