States Can Block the Paramount-Warner Deal

But thanks to some clever maneuvering, they are already running out of time.

What started as a bidding war for Warner Bros. Discovery became an unconditional surrender Thursday. Netflix had a deal in place for a couple of months, but Paramount, under the direction of MAGA heir David Ellison, made a hostile takeover bid, and this week upped its offer from $30 to $31 a share for all of WBD, including its cable channels. The total purchase comes to $111 billion, and on Thursday the WBD board pronounced the offer superior to Netflix’s, giving the streamer four days to match it. Netflix, whose CEO was at the White House on Thursday (what was he told?), barely needed an hour, dropping its effort.

So what many see as a worst-case scenario is realized: the Ellison family wresting control of two major movie studios, CBS, HBO, CNN, and secondarily TikTok. There are certainly echoes of media-political consolidation as we see in dictatorships the world over. (By the way, Netflix will be fine: They get a $2.8 billion breakup fee for doing essentially nothing, and Paramount-Warner isn’t that big a competitor to their business.)

But by Thursday night, hours after this whirlwind set of announcements, California Attorney General Rob Bonta was out with this statement, sent to the Prospect and others: “Paramount/Warner Bros is not a done deal. These two Hollywood titans have not cleared regulatory scrutiny—the California Department of Justice has an open investigation, and we intend to be vigorous in our review.”

Going back to last Friday, Bonta had been saying that any Warner Bros. transaction “must receive a full and robust review, and California is taking a very close look.” Colorado AG Phil Weiser, who is running for governor, has also been outspoken; they and any other AG could team up on a challenge. Representatives from Paramount, including Ellison, visited the Democratic Attorneys General Association policy conference last week in San Francisco, so they are very aware that the states can use the Clayton Act to challenge mergers, no matter what the federal government does.