Twelve US states take on Paramount

**Gideon Long** (0:01)
12 US states sue Paramount Skydance over its proposed takeover of Warner Brothers.

**Rob Bonta** (0:07)
This proposed merger of Paramount Warner Brothers in an already concentrated market will only concentrate the market further, reduce competition, raise prices, reduce quality, reduce content.

**David Ellison** (0:16)
Having another scaled buyer, that's going to be good for the creator economy, it's going to be good for Hollywood.

**Gideon Long** (0:20)
It's World Business Report from the BBC World Service. I'm Gideon Long. Yes, I've been speaking to California's Attorney General Rob Bonta, who's leading the charge against that proposed $81 billion Hollywood merger. Plus diamonds are forever, but perhaps not from South Africa's biggest diamond mind. And what would you pay for an item of trash from Taylor Swift's wedding?
We're starting the programme in Hollywood because 12 US states have filed a lawsuit against Paramount Skydance in a bid to block its $81 billion takeover of Warner Brothers. The 12 mostly Democrat leaning states say the bid is unlawful, it would extinguish competition, and it would be bad for you, the cinema goer, the TV watcher, not just in the US, but around the world. The legal case against Paramount is being led by the Attorney General of California, Rob Bonta. I spoke to him a short time ago.

**Rob Bonta** (1:19)
Well, you have two major, highly diversified companies trying to engage in a $110 billion merger that would be the largest deal of its kind in the history of Hollywood, and they have been long-time competitors, and now all of a sudden will be merged into one company that will give them negotiating power in specific markets that will extinguish competition, and allow them to dictate terms with movie theaters when it comes to two of the markets, distribution of wide-release theatrical films, and distribution of top-grossing theatrical films, and it will also give them incredible negotiating power when it comes to licensing of basic cable channels to cable companies. They will have 50 of the most sought-after cable channels in the nation, and they will be able to raise prices, set dictate terms with cable companies, and that means higher prices for people who have satellite or cable TV, higher prices at movie theaters. So it is exactly the type of thing that we have seen historically and that you would expect to see when competition goes away and prices go up, workers get hurt, lower wages or job loss completely, quality goes down, choice goes down, competition goes down.

**Gideon Long** (2:29)
Paramount, of course, disagree with you. Its CEO, David Ellison, spoke to CNBC's Squawk Box program a few months ago. Let's just have a quick listen to what he said then.

**David Ellison** (2:38)
For the creator economy, having another scaled buyer as a place that, well, we want to grow. And our only way to obviously grow and to get the first place in streaming is to invest more in content. That's going to be good for the creator economy. It's going to be good for Hollywood.

**Gideon Long** (2:52)
So a bigger company with more money to commission programs to invest in content, that sounds like it should be good for the consumer.

**Rob Bonta** (2:58)
Yeah, we've seen this movie before, you know, pardon the pun. But when Disney and Fox merged, their content output went down. They made less movies. And the merger of Disney and Fox already concentrated the market. And so this proposed merger of Paramount Warner Brothers in an already concentrated market will only concentrate the market further, reduce competition, raise prices, reduce quality, reduce content. So it's a good talking point, but history has not proven it to be true. And I think most people do not think that a merged Paramount Warner Brothers will increase its content output, certainly not reach the levels that the executives like David Ellison have suggested they'd hit. I think they said they would be making 30 movies a year.

**Gideon Long** (3:37)
You said not only that you oppose this, but it's unlawful. How so?

**Rob Bonta** (3:41)
Well, that's why I oppose it, because it's unlawful. And it violates anti-monopoly law, anti-trust law. We have laws in the United States of America that require there to be free and fair markets, not rigged markets, where there needs to be free competition and where you are able to be successful based on the quality of your product, not based on your enormous manipulation of enormous market share and market concentration. So under the Clayton Act, which is a federal law, Section 7 dictates the laws around mergers. They cannot substantially decrease competition. And we've identified three markets here where this proposed merger would substantially decrease competition and are presumptively unlawful.