Rob Bonta, California’s attorney general, says it’s not his job to protect Hollywood giants from the rise of Netflix and other streaming insurgents.
This week, Bonta and 11 other attorneys general sued Paramount Skydance to stop its deal to buy Warner Bros. Discovery. Paramount says it needs the deal to compete with tech giants in streaming and transition to a new media model.
Bonta told Business Insider that’s irrelevant to his antitrust case.
“We’re indifferent to — I guess, from a legal perspective — what markets are growing, which ones are shrinking,” Bonta said in an interview. “Maybe the theater market is shrinking, the cable market is shrinking, the streaming market is growing. We don’t have a specific opinion on that in this case. And we’re not trying to help one grow or stop one from shrinking.”
Bonta said his suit focuses on how Paramount’s WBD deal could affect market concentration in three areas: distribution of wide-release movies, distribution of big-budget blockbuster films, and licensing of cable channels.
Bonta argues that buying WBD would give David Ellison’s Paramount too much power over theater owners, pay-TV distributors, and — by extension — consumers. He’s seeking a preliminary injunction, or a temporary court order to pause the Paramount-WBD transaction.
“They’ll be able to dictate terms with the theaters,” Bonta said. “They’ll be able to ask for more money. The theaters will have to pay more. That means raised costs for moviegoers.”
Paramount says its merger would create “a stronger competitor against dominant streaming and technology platforms who have harmed the market for theatrical exhibition and jobs in the entertainment industry.”
Bonta said that his lawsuit isn’t about the streaming business and said Paramount’s point about tech giants like Netflix and Amazon is a “distraction and a deflection.”
“The streaming market is not one of the markets that we’ve identified as a market that will create so much market concentration by the merger that it will be unlawful under the Clayton Act,” Bonta said. He added that Ellison and company “want Netflix to be the black cat, but Netflix is not part of our case.”
A supercharged Paramount-WBD would control HBO, CBS, and CNN; streamers HBO Max, Paramount+, and Pluto TV; TV networks like TNT, HGTV, and Comedy Central; and two major film studios in Paramount Pictures and Warner Bros. Studios.
Star actors and directors like Ben Stiller have also spoken out against the deal, which the US Department of Justice has already approved, warning that the tie-up would result in “fewer opportunities for creators.”
Corey Martin, a lawyer who’s chair of the entertainment finance practice at Los Angeles-based Granderson Des Rochers, told Business Insider that Bonta’s decision to exclude streaming from the market concentration calculation was a “novel approach.”
“It’s hard to envision this deal in its totality without considering streaming,” Martin said, given that “streaming is the driver for the deal.”
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