Paramount head David Ellison's $111 billion acquisition of Warner Bros. Discovery is unraveling, with a coalition of 12 states filing a blockbuster antitrust lawsuit designed to derail the merger as the media executive faces a financial time bomb that could cost him hundreds of millions of dollars.
According to media watchdog Status, Monday's complaint, filed in federal court in California, represents a potential death blow to one of the entertainment industry's most controversial proposed mergers. The lawsuit argues that combining Paramount and Warner Bros. would "extinguish competition" and cause "substantial harm" to consumers and the media industry.
As the report highlights, opposition to the mega deal has united liberal strongholds like California and New York with conservative states including Arizona and Nevada, suggesting the deal has managed to alienate leaders across the political spectrum
At the center of the opposition is the future of CNN, which has the potential to be put under the command of controversial CBS News head Bari Weiss.
According to Oliver Darcy of Status, California Attorney General Rob Bonta made clear the deeper worry that handing CNN to the Ellisons, who have repeatedly and unapologetically courted Donald Trump, poses a threat to America's information environment.
The Ellisons have been extraordinarily aggressive in cultivating Trump's favor, soliciting his backing and support from administration officials. That strategy has backfired spectacularly.
"If it were this bad publicly, imagine what must have gone in the shadows," Norm Eisen, co-founder of Democracy Defenders Action, told Status. "They've mightily p---ed off these 12 AGs."
The effort led to a blunt verdict from Darcy.
"David Ellison may have been California dreamin’ about getting his Warners deal cleared by the Golden State—but he’s now facing a nightmare as it and 11 other states sue to block it on antitrust grounds," he wrote.
Ellison agreed to pay Warner Bros. shareholders a "ticking fee" — monthly penalties if the deal doesn't close. After Sept. 30, Paramount will owe hundreds of millions of dollars every month the merger remains incomplete. At that rate, quarterly delays could cost billions.
As Darcy wrote, "None of these challenges have to actually win out in the legal system to have the potential to sink the deal. Simply slowing down the merger poses a significant problem for the Ellisons."