Paramount Skydance Defends Merger, Calls Antitrust Lawsuit 'Weak'

Paramount Skydance has started setting forth its defense against an antitrust lawsuit filed by 12 states, terming it “one of the weakest merger challenges in modern antitrust history.” The states’ motion for a temporary restraining order, which if approved would halt the $111 billion merger with Warner Bros. Discovery, is currently being opposed by Paramount. They argued that the accusation that the merger will cause market harm contradicts the prevailing economics of the film business.

In the legal filing, Paramount's attorneys pointed out that the presence of robust competitors including Universal, Disney, Amazon MGM, Sony, Lionsgate, A24, and NEON ensure that competition will remain strong. They also noted that the merger is expected to boost, not shrink, the production of theatrical motion pictures and wouldn't negatively affect pricing for theatres.

Originating from the office of California Attorney General Rob Bonta, the coalition claims that the proposed merger may lead to an unlawful market concentration, asserting the merged entity would hold 30% of the blockbuster film distribution market. Paramount, however, countered these arguments by citing the successful Amazon MGM Studios release, "Project Hail Mary," as an example of how other distributors could increase their output if Paramount reduced theirs, thus negating any potential pricing power Paramount could hold over theatres.

Paramount also addressed the criticism that the merging entities, being two of the most substantial owners of basic cable channels, could unfairly dominate cable and satellite TV providers. The company maintained that the cable lineup of both Paramount and Warner Bros. Discovery are complementary rather than substitutable, meaning cable providers would still want to access all channels. Plus, they pointed out that the trend of cutting traditional cable services is reducing every cable channel owner's bargaining power.

The court hearing regarding a temporary injunction will be held on Friday before Judge Araceli Martinez-Olguin.