MICHEL MARTIN, HOST:
The blockbuster merger of two Hollywood giants may be in peril. A dozen states filed a lawsuit Monday to block Paramount from taking over Warner Bros. Discovery. California Attorney General Rob Bonta says the union would lead to, quote, "higher prices, lower quality and less" content for film and television, unquote. We'll hear from the attorney general in a few minutes.
A MARTÍNEZ, HOST:
Let's now turn to NPR media correspondent David Folkenflik. David, so how big of a company would this merger of Paramount and Warner create?
DAVID FOLKENFLIK, BYLINE: Well, Bonta said yesterday the merger would kill competition between two of the nation's five largest, you know, studios - the five largest studios of Hollywood. You know, it'd be a Titanic merged studio - in fact, the studios that brought us "Titanic" and franchises like "Star Trek" and "Harry Potter" and classics like "Casablanca" and "Sunset Boulevard." But it's not just about the studios. It's about other things as well. It's about streaming platforms - Paramount+ and HBO Max. It's about news. You'd see CNN and CBS News. It's about 50 cable channels and the CBS broadcast network all under the same roof. What Bonta says is the Justice Department declined to file a lawsuit, so the states are stepping in.
MARTÍNEZ: Why did the Justice Department decide not to sue?
FOLKENFLIK: So the Justice Department undertook an eight-month review. It investigated and concluded publicly that the merger would be good for competition, especially against these giant streamers like Netflix, Amazon and even Apple, which is part of the logic that Paramount has put out there for it.
I think we cannot in any way dismiss or negate the influence, whether direct or indirect, of President Trump. Paramount is owned by the Ellison family - Larry Ellison, the co-founder of Oracle, one of the richest people on the planet; his son, David, the Hollywood producer. They only took over Paramount a year ago with Trump's strong approval and recommendation. Trump arranged for Larry Ellison to take a controlling stake in TikTok U.S., and he's also an adviser to the president. In this case, you know, The Wall Street Journal reported that the top officials at the Justice Department were clearing a path for this deal to happen even as career lawyers wanted to file suit. The top antitrust official at Justice Department, who's leaving the department, said that's not the case.
MARTÍNEZ: So what does Paramount say in response to the lawsuit?
FOLKENFLIK: Well, they put out a statement yesterday saying this is a fundamental misreading of antitrust law - that, in fact, if you do look at those huge digital titans like Netflix and like Amazon, the market has expanded beyond what you think of as the traditional Hollywood studios. They note that Disney bulked up in 2019 to complete a deal to take over most of the entertainment holdings of Fox. You know, President Trump gave his seal of approval for that, as he called his buddy Rupert Murdoch, who controls Fox, and said, you know, are you holding on to Fox News? Murdoch said yes, and Trump said, you go right ahead. That's great.
So, you know, Paramount is saying, we need to do this - that it will hurt workers to block this deal. I will say that's something that the attorneys general and that the Writers Guild of America and others who are on the labor side of things dispute. They're worried that with fewer employers, prices will be driven down for those who create all this and driven up for those of us who pay for these services.
MARTÍNEZ: David, I got a feeling this is not going to be resolved any time soon.
FOLKENFLIK: Well, unless Paramount magically gets this dismissed in federal court in California, this could stall the merger for weeks or, more likely, at least months. And that can get really expensive for the company. Paramount has a deal with Warner Bros. Discovery that, for every 90 days after October 1 that the deal isn't consummated, it owes an extra $650 million to Warner Bros. Discovery shareholders. And if the deal never goes through, it owes $7 billion as a breakup fee. But this is going to get increasingly expensive and increasingly complicated for Paramount to be able to pull off, which is some of the leverage that the attorneys general get even if they don't ultimately prevail in court.
MARTÍNEZ: That is NPR's David Folkenflik. David, thank you.
FOLKENFLIK: You bet.
MARTÍNEZ: And we should note - Paramount and Warner Brothers are financial supporters of NPR. Transcript provided by NPR, Copyright NPR.
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