Paramount Seeks Judge’s Recusal in State Antitrust Fight Over Warner Bros. Discovery Deal

According to Deadline’s Ted Johnson, Paramount filed papers seeking the removal of U.S. District Judge P. Casey Pitts from the case shortly after a coalition of state attorneys general sued to block the transaction. The motion comes as the company faces growing scrutiny from regulators, labor groups and state officials concerned that the combination could significantly reshape competition across film, television and streaming markets.

The lawsuit, led by California Attorney General Rob Bonta and joined by 11 other states, argues that the merger would substantially reduce competition in theatrical film distribution and cable television licensing, potentially resulting in higher prices, diminished consumer choice and fewer opportunities for creative workers. The states contend that the combined company would wield outsized leverage in negotiations with movie theaters, distributors and content creators.

Deadline reported that Paramount’s recusal request centers on concerns about whether the assigned judge should preside over the dispute. The filing represents the latest procedural maneuver in a rapidly escalating legal battle that could delay the merger’s anticipated closing timetable.

The proposed transaction would unite two of Hollywood’s major legacy studios and combine a broad portfolio of media assets, including CBS, Paramount Pictures, HBO Max, CNN, MTV and numerous cable networks. Critics of the deal argue that further consolidation in the entertainment sector risks concentrating market power among a shrinking number of companies. State attorneys general have alleged that, following the merger, a small group of firms would control the overwhelming majority of major theatrical film distribution in the United States.

Related: Asset Sales Loom Over Paramount-Warner Deal as States Escalate Antitrust Fight

Paramount has rejected the antitrust claims, maintaining that the merger is necessary to compete against large technology and streaming rivals such as Netflix and Amazon. The company has argued that the entertainment marketplace has changed dramatically, with traditional studios facing mounting pressure from digital platforms and declining linear television revenues. Executives have also asserted that the transaction would support content investment and create a stronger competitor in global media markets.

The legal challenge from the states emerged despite the expiration earlier this year of the federal waiting period under the Hart-Scott-Rodino Act and the Justice Department’s decision not to pursue its own lawsuit against the deal. Reports subsequently indicated that some career antitrust staff had expressed concerns about the transaction before federal leadership allowed the review to conclude without litigation.

Competition authorities outside the United States continue to review the merger. The United Kingdom’s Competition and Markets Authority is conducting an inquiry into the transaction, while European regulators have extended their review timetable as they assess proposed remedies offered by Paramount. Those remedies reportedly include changes to certain international film distribution arrangements.

The merger has also drawn opposition from organized labor in Hollywood. The Writers Guild of America filed a separate lawsuit this week seeking to block the transaction, arguing that increased consolidation would reduce employment opportunities, suppress compensation and diminish creative diversity in the industry.

Source: Deadline