Twelve U.S. states have gone to court to stop the planned merger of Paramount and Warner Bros. Discovery, arguing the deal would hurt local movie theaters that are still working to recover ticket sales lost during the pandemic.
California’s Attorney General made the case at a Monday news conference held in front of the Hollywood sign, warning that the merger would hit consumers in the wallet. “While ticket prices will most likely go up, theaters will be forced to cut back on investments that make the experience better for audiences: comfier seats, expanded concessions, and premium screens,” he said.
If the deal goes through, it would bring together two of the country’s five major film distributors and consolidate ownership of several cable television networks. The states argue the combined company would gain unfair bargaining power over both theater owners and pay-TV providers.
With one fewer major film distributor in the marketplace, studios could more easily pressure theater owners into giving up a larger cut of ticket sales, according to the complaint filed by California and 11 other states, including Oregon, New York, and Minnesota.
Cable TV customers could also feel the pinch. “Your cable bill is going to go up because those cable companies that distribute the channels will have less negotiating power,” the California Attorney General said.
Under the proposed merger, the complaint states that Paramount’s combined market share in both the movie theater distribution and basic cable sectors would exceed 27% in each area.
Paramount, led by CEO David Ellison, fired back with a statement accusing the states of distorting established antitrust law and mischaracterizing the competitive landscape of the entertainment business. “Delaying this transaction will only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood and cost California tens of thousands of entertainment jobs,” the company said.
There are also financial stakes for Paramount in getting the deal done quickly. Ellison has agreed to pay Warner Bros. Discovery shareholders a 25-cent-per-share “ticking fee” — roughly $650 million in cash every quarter — if the merger isn’t finalized before October.
Cinema United, a trade organization representing theater owners that has been lobbying against the deal, praised the lawsuit. “The ramifications of further movie studio consolidation will be significant and lasting, not just in Hollywood, but on Main Streets across this nation where local movie theaters serve as cultural and financial cornerstones for communities of all sizes,” said Cinema United President and CEO Michael O’Leary.
An executive at an independent theater chain, who asked not to be identified out of concern about damaging their relationship with Paramount, expressed worry that a merged Paramount and Warner Bros. could increase the rental fees theaters pay to screen major blockbuster films. Traditionally, studios and theaters have split ticket revenue roughly in half, though studios can claim as much as 60% of proceeds for highly anticipated releases. “Theaters will have no recourse,” the source said.
As studios take a bigger slice of box-office revenue, theater owners may be left with little choice but to raise ticket prices or cut back on facility upgrades, the lawsuit alleges. In recent years, many theaters have been investing in improvements — such as more comfortable seating and expanded food and beverage options — to draw audiences away from streaming services.
Box office receipts in the U.S. and Canada have reached $5.1 billion so far in 2026, which is 10.6% ahead of last year but still 16.3% below where things stood in 2019, before the pandemic, according to Rentrak data.
The California Attorney General pointed to the 2019 acquisition of Fox’s entertainment assets by Walt Disney as evidence that past media mergers have already hurt the industry. Between 2015 and 2018, Disney and Fox together released 112 wide-release films. That figure dropped to just 54 between 2022 and 2025, according to the lawsuit.
The complaint also argues that cable TV providers would be weakened by the merger, since Paramount and Warner Bros. would no longer be competing against each other to sell their networks. The combined company would control a wide range of popular channels, including CNN, TNT, Food Network, and HBO, giving it significantly more leverage in negotiations with distributors. TV providers would have “little choice” but to accept whatever terms the new company offered, the suit contends.
Notably, the states’ complaint does not challenge Paramount’s plan to merge its Paramount+ streaming platform with Warner Bros.’ HBO Max.
