By Jody Godoy and Nathan Frandino
June 5 (Reuters) – California Attorney General Rob Bonta will soon decide whether to sue to block Paramount’s $110 billion acquisition of Warner Bros, he told Reuters in an interview, adding that in general he views any corporate promises to address antitrust concerns as better when backed up by potential divestitures.
Bonta’s office has been reviewing the deal for potential violations of U.S. antitrust law, as movie theater owners, Hollywood actors and others have expressed concerns that it would decrease competition across the industry, leading to lower wages, higher prices and fewer options for consumers and content buyers.
Antitrust authorities in Europe are set to decide by early July whether to clear the deal, while the U.S. Department of Justice is likely to reach a decision soon, according to a source familiar with the matter. The deal could close once it clears those reviews, putting time pressure on Bonta’s office, which is seen as the most likely enforcement agency to challenge the deal.
“There’s not a lot of time left before we will need to act if that’s what we decide to do,” Bonta said in an interview in Oakland, California.
The combination of two major U.S. film studios has elicited angst in Hollywood over the potential for fewer productions. Bonta said his office has heard from many workers in the industry and that their concerns have raised “even more red flags.”
Antitrust enforcers can challenge mergers that would significantly harm competition, including competition among employers for specialized labor.
“We think we have a central role in being able to protect jobs in Hollywood with respect to the Paramount-Warner Brothers proposed merger,” Bonta said.
A Paramount spokesperson said the company has “every economic incentive” to expand production after the merger in order to grow streaming service subscriptions. Paramount CEO David Ellison has vowed that the combined company will release 30 movies per year in theaters. The company views theatrical releases as key to marketing its streaming offerings, it recently said in court papers.
Asked whether Paramount should be required to spin off any parts of its business to protect competition, Bonta said that behavioral remedies, where companies agree to take particular actions, are not always adequate.
“Can they be part of a solution? Maybe. Should they be backed, if they’re even pursued at all, by a structural remedy consequence if they’re not adequate? I’d say so. That’s kind of the way I’m thinking about it,” he said.
Paramount Chief Legal Officer Makan Delrahim said in a statement that the company is “always prepared to remedy legitimate and articulated violations of the antitrust laws,” but that it believes the deal presents none.
STATES TEAM UP TO TAKE ON ANTITRUST
California’s Department of Justice has the largest antitrust division in the country, with just under 50 people. And the state is adding eight more attorneys this year along with eight support staff, Bonta said. California Governor Gavin Newsom has proposed adding $14.3 million to Bonta’s budget for antitrust work.
A number of other states are talking to California about a joint challenge to the deal, two people familiar with the matter said.
However, there was no indication that the states have come to an agreement on their approach. The potential costs involved if California hires an outside lawyer could be a factor for states, the sources said.
“The full range of options are on the table and available and are fully resourced, no matter what we decide,” Bonta said when asked if the state was prepared to take action on its own.
California has worked with both Democratic and Republican-led states on major antitrust cases in the past, including a recent win against Live Nation.
Working together is more important now that the Trump administration is “picking winners and losers based on who their friends are,” Bonta said.
But antitrust cases often cost tens of millions of dollars, raising questions about how many major lawsuits the states can bring without their federal partners.
“We will find a way, either we’ll go back and ask for more money, we’ll all pitch in enough resources, we’ll hire outside counsel, whatever it takes,” Bonta said. “I think the people of our states and the people of this country want that, and I know they deserve that.”
(Reporting by Jody Godoy in New York, Nathan Frandino in Oakland and Dawn Chmielewski in Los Angeles; Editing by Christopher Cushing)
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