The Writers Guild of America has filed a lawsuit against Paramount Skydance to block its planned acquisition of Warner Bros. Discovery one day after 12 state attorneys general filed for a restraining order to block the merger.
“With fewer competitors, the merged Paramount-Warner Bros. entity would have both the incentive and the ability to lower costs by suppressing writers’ wages and reducing output. Writers will be paid less and have fewer employment opportunities,” states the WGA complaint filed in theUnited States District Court for the Northern District of California, where California AG Rob Bonta filed his own lawsuit on Monday.
The Writers Guild has long spoken out against media mergers for the reasons stated above along with others, warning that mergers such as the AT&T-Warner Bros. and Disney-Fox mergers have led to thousands of layoffs and fewer film and television productions greenlit. Paramount has promised that this would not be the case, pledging to release 30 films per year should the Warner deal be completed.
“If Paramount succeeds in buying Warner Bros., the merged firm will be the largest buyer of original film and television programming in the United States,” said WGAW President Michele Mulroney. “This would eliminate competition in an already consolidated industry, threatening the livelihoods of entertainment workers and the creative diversity of TV and film. We applaud the dozen state Attorneys General who have stepped up to enforce our antitrust laws and are proud to file suit along side them.”
“The Writers Guild of America will not stand idly by as Paramount attempts to violate our country’s antitrust laws and deepen the contraction entertainment workers already feel,” said WGAE President Tom Fontana. “This proposed combined entity would be the largest employer of writers, with tremendous power to suppress our wages, eliminate opportunities for emerging writers, cut jobs across the industry, and produce less programming, effecting the range of storytelling. This merger is not inevitable and we are fighting to stop it.”
After months of pushing the merger swiftly through the federal regulatory process with the help of former Trump Administration antitrust chief Makan Delrahim, Paramount Skydance is now encountering their first significant hurdles to completing the Warner acquisition.
Along with the lawsuits from the WGA and a dozen Democrat AGs, the merger may also face a challenge from the United Kingdom, as culture minister Lisa Nandy sent notification to Paramount that her office is “minded to intervene,” a British legal term used to warn of likely impending legal action.
This could have a significant impact on Paramount’s finances, as its agreement with Warner Bros. includes a 25-cent-per-share ticking fee for every quarter that the merger is not closed after Sept. 30. Prominent merger trials such as the one over the proposed merger of supermarket companies Kroger and Albertsons took approximately seven months to complete.
Despite this, Paramount’s outside counsel Jeffrey Kessler told CNBC on Tuesday that it still expects to close the merger by September, as the restraining order that the state AGs have filed for could only last for four weeks at most, and the company does not believe that the AGs have the case to file for a preliminary injunction that would last longer.
“This is an antitrust case. To stop a merger, the merger has to be anti-competitive. This merger is pro-competitive,” Kessler said. “This merger is designed to make a stronger linear television company, to make a stronger theatrical producer and to create a true competitor in streaming that can go toe-to-toe with a Netflix or a Disney or a Prime. So that’s something that consumers should want, labor should want, theaters should want.”
“We’re not going to close before July 22, and the plan is still to close this quarter before the end of September. That is the goal. I think we’ll either do it because they won’t get a preliminary injunction or because we’ll meet a happy agreement with them. One way or the other,” he added.
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