Blocking the Paramount-Warner Brothers merger wont save Hollywood
From the start, the sale of Warner Bros.Discovery has unfolded like a Hollywood drama.
Years of financial turmoil, failed corporate restructurings, and competing acquisition bids have now given way to the latest unexpected plot twist.After a Joe Biden-appointed federal judge in California granted a temporary restraining order, Paramount and Warner Brothers agreed to pause their transaction while an antitrust lawsuit proceeds.
The legal battle is only beginning — and California is playing a leading role.Led by California Attorney General Rob Bonta, twelve state attorneys general filed the lawsuit earlier this month challenging Paramount’s acquisition of Warner Brothers.They claim they were forced to act to protect consumers and competition.But that’s not the whole story.
The lawsuit is based on a new antitrust philosophy that treats any corporate consolidation as inherently nefarious, regardless of its impact on prices or consumer choice. Unfortunately, this isn’t the first time Bonta has tested out his esoteric theories about how markets should work.Bonta played a leading role aiding in the downfall of the budget carrier Spirit Airlines.
The low-cost airline sought a merger with JetBlue as a last ditch lifeline to stay afloat and serve its customers. Bonta brought California into an antitrust lawsuit to block the merger.After the courts killed the deal in 2024, Bonta put out a press statement celebrating the outcome as a “big win for consumers.” In reality, the decision forced Spirit Airlines to file for bankruptcy.The airline laid off 15,000 workers, and left travelers with one fewer budget-friendly option.
That’s hardly consumer protection. Traditionally, antitrust lawsuits were supposed to be based on a “consumer welfare standard.” That principle states that antitrust action should be strictly limited to situations where market concentration harms consumers.Instead, regulators in California and like-minded states have begun espousing a ...