A group of consumers has renewed its legal challenge to the $110 billion merger between Paramount and Warner Bros. Discovery, alleging that the entertainment giants’ consolidation threatens competition in streaming and film production as the combined company pursues billions of dollars in cost reductions.
The antitrust lawsuit, refiled in California federal court, seeks to reverse the Paramount-Warner Bros. Discovery transaction and the earlier $8 billion combination of Paramount and Skydance, according to a Nov. 13 report by Lucas Manfredi in TheWrap.
The legal action adds uncertainty to one of Hollywood’s largest recent consolidations, which closed in October following settlements with 12 state attorneys general and the Writers Guild of America.
At the center of the dispute is Skydance Chief Executive David Ellison’s strategy to integrate Paramount+ and HBO Max, initially through a subscription bundle planned for 2027 and eventually through a unified streaming platform.
The plaintiffs argue that bringing the competing services under common ownership could reduce consumers’ ability to choose between independent providers, potentially allowing the company to charge more while offering fewer distinct programming options, according to TheWrap’s account of the complaint.
The consumers also allege that they suffered financial harm from Paramount+ subscription price increases following Skydance’s acquisition of Paramount.
Debt and Restructuring Plans Draw Scrutiny
The renewed challenge comes as the merged entertainment company moves forward with an ambitious restructuring program intended to generate at least $6 billion in savings over three years.
According to TheWrap, the plaintiffs contend that the company’s nearly $80 billion in net debt creates pressure to increase subscription revenue, eliminate overlapping operations and limit spending on independently developed entertainment.
The lawsuit cites restructuring at Skydance Games and the reported departures of DC Studios leaders James Gunn and Peter Safran as examples of changes that could affect creative production.
The plaintiffs argue that combining previously independent production operations could result in fewer films and television programs reaching audiences.
Those assertions remain allegations and have not been established by a court.
The company’s financial strategy, meanwhile, calls for substantial savings across corporate operations, technology, marketing and procurement.
Related: Paramount-Warner Bros. Merger Faces Fresh Legal Challenge Over Streaming
TheWrap reported that executives identified at least $2.2 billion in potential savings from administrative consolidation, $1.4 billion from technology integration, $1.4 billion from procurement and vendor management, and $1 billion from marketing efficiencies.
Skydance expects to achieve about 30% of its targeted merger savings during the first year and approximately 70% within two years.
Despite the reductions, the company plans to spend more than $30 billion annually on content, according to the entertainment publication.
Streaming Integration Creates Competitive Questions
The planned combination of Paramount+ and HBO Max represents a central element of the company’s growth strategy.
Together with HBO, the streaming businesses had approximately 203 million subscribers worldwide as of the third quarter, according to figures reported by TheWrap.
Paramount+ accounted for 82.2 million subscribers, while HBO Max and HBO represented a combined 120.8 million.
Ellison has outlined plans to integrate the services’ underlying technology within the first year following the merger’s completion, ahead of their eventual consolidation into a single consumer platform.
For Skydance, the strategy offers an opportunity to simplify operations, reduce duplicated technology expenses and strengthen its position in an increasingly competitive streaming industry.
For the plaintiffs, however, common ownership raises concerns that consumers will lose meaningful alternatives between two major entertainment providers.
The lawsuit seeks a court order requiring the services to remain separate, according to TheWrap.
Plaintiffs Seek to Reverse Completed Transactions
The renewed complaint follows an earlier legal setback for the consumers.
In August, U.S. District Judge Araceli Martínez-Olguín dismissed their initial antitrust challenge after finding that the plaintiffs had not adequately demonstrated the individual harm required to pursue their claims. The judge permitted them to submit an amended complaint, TheWrap previously reported.
The latest filing attempts to strengthen the challenge by focusing on developments surrounding the completed merger, including subscription pricing, organizational changes and the company’s integration plans.
Source: TheWrap
