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AUTHORSHIP
20 July 2026
Paramount's reported threat to exit California over lawsuit is a monopolist's tell
The company's reported threat to leave the state in response to merger challenge validates the market power and leverage concerns behind the suit
Attribution: BoliviaInteligente (Unsplash)
I. Introduction
ISSUE AREAS
ANTITRUST & COMPETITION
MEDIA CONSOLIDATION
Once dismissed as marginal players in antitrust enforcement, state attorneys general have increasingly asserted themselves as the leading bulwark against monopolistic behavior. The federal government’s retreat from antitrust enforcement and the victory of states over Live Nation following the DOJ’s withdrawal affirmed their role in preventing anticompetitive conduct. On July 13, a coalition of 12 state attorneys general led by California’s Rob Bonta filed a lawsuit to block Paramount's acquisition of Warner Bros. Discovery (WBD) over concerns that the merger of two of the five major film distributors would devastate competition in Hollywood. The merger and the prospect of a state-led challenge had already attracted unusual amounts of attention due to concerns surrounding the politicization of the DOJ Antitrust Division and Paramount's apparent courtship of the Trump administration.
Days prior to the filing, reports emerged that Paramount was considering moving its corporate headquarters out of California, along with $30 billion in annual spending. The news was widely received as a retaliatory threat, with Bonta himself describing it as “a last-ditch effort to try to blackmail my office." Far from a justification for the states to abandon the merger challenge, this development only reinforces the underlying concerns behind the lawsuit. Sen. Chris Murphy (D-CT) noted that a company that considers itself large and powerful enough to effectively veto antitrust scrutiny through the mere prospect of moving inadvertently makes the case for antitrust scrutiny, and particularly challenges the notion that “market power post-merger won't be a problem”.
Apparent threats of economic retaliation to evade regulatory scrutiny has become a regular practice by corporations facing antitrust lawsuits. Tech industry giants including Meta, Google, and Apple have all employed versions of this tactic in recent years, and Paramount’s reported employment of this strategy only emboldens anti-monopoly critics. This conduct reflects a broader pattern of Paramount seemingly focusing more on influencing the conditions of antitrust review than defending the merger’s merits. As press freedom concerns mount over the prospect of a Trump-aligned corporation controlling both CNN and CBS News, these reported tactics only underscore the notion that Paramount is willing to subordinate the public interest to its commercial interests.
II. Grounds for Concern
STAKES OF PROPOSED MERGER AND LAWSUIT
Should the deal ultimately come to fruition, competition in the film industry would be meaningfully reduced. If it passes, just four companies would control over 85% of the market for so-called “wide release” films, reaching 90% among the market for anticipated top-grossing films. Cinema United, whose membership encompasses over 31,000 movie screens across the country, has backed the lawsuit over concerns that combination would give Paramount increased leverage against theater owners in negotiations. The combined company would control around 27% of the total basic cable programming market, a position that gives it significant bargaining power over cable and satellite distributors. The merger has also received opposition from the Writers Guild of America (WGA), which launched its own suit days later over concerns that reduced competition will result in lower wages and worse conditions for writers.
In addition to shaping Hollywood’s competitive landscape for years to come, the success or failure of the state’s merger challenge will be a durable test of whether antitrust law can be enforced in the absence of federal will. The DOJ’s approval of the merger despite apparent staff skepticism aligns with the second Trump administration’s record of approving mergers by corporations aligned with the White House. The states’ lawsuit, far from a partisan exercise, has been characterized as substantively grounded and amounting to a conventional antitrust challenge against an anti-competitive merger. And while opponents of the state challenge suggest that the effort is futile, The New York Times has reported that dealmakers are increasingly concerned about state antitrust scrutiny and have passed on potential transactions accordingly.
RETALIATORY PLAYBOOK
Far from an aberration, Paramount’s apparent threat to leave the state of California in response to the state-led antitrust suit against it is reminiscent of how many corporations have responded to scrutiny in recent years. This can be seen plainly among the Big Tech companies over the past five years, who have either threatened to or actually gone ahead with exiting a jurisdiction they have faced either antitrust scrutiny or other scrutiny. In Canada, Meta blocked news access for all users in the country in response to the Online News Act’s passage in 2023, an action that had real-world consequences during a wildfire emergency later that year. Google had previously threatened to pull its search engine from Australia over the News Media Bargaining Code, a law similar to both the Canadian legislation and proposed Journalism Competition and Preservation Act in the U.S.
Across the Atlantic, Apple last year threatened to stop selling iPhones, the company’s top-selling product, in the European Union in objection to the Digital Markets Act (DMA); the company would also later restrict AirPods’ AI features in the market in response to DMA enforcement. In a domestic context, Meta recently employed this threat in New Mexico in response to the state’s child safety lawsuit legislation. Regardless of the company or jurisdiction in question, the underlying logic of this tactic is consistent. In each instance, the relevant company considers itself powerful enough to deter governments from enforcing the law. The mere threat of exiting a certain jurisdiction can be enough to force capitulation, and Bonta’s refusal to stand down sends a firm message to Paramount and other companies considering such a tactic.
III. Familiar Tactics and Prospective Impact
TACTICS REMINISCENT OF MONOPOLISTS
Paramount's insistence that acquiring WBD is a competitive necessity, rather than an effort to entrench its market power, is a familiar argument. To make the case for the merger, Paramount has made the case that the merger is the only way for the combining firms to compete in the digital era against the likes of Netflix and Amazon. This argument is reminiscent of logic employed by Kroger in its defense of its proposed merger with Albertsons, where it argued the combination was necessary for it to compete with the likes of Walmart and Amazon. Kroger’s acquisition effort was successfully challenged by both FTC and a coalition of state AGs, including California’s Bonta. Nevertheless, as the case of Paramount shows, the argument that reducing the number of players in a market would benefit competition remains a favored defense.
During the second Trump administration, corporations facing antitrust scrutiny such as Google and Meta have been criticized for apparent overtures to the White House through donations to the inauguration fund and the White House ballroom project. Reporting by ProPublica suggests that Paramount may have employed a similar strategy in its dealings with FCC officials. The company’s demand that Judge P. Casey Pitts, who had been randomly assigned to the case, recuse himself over past work for the WGA is similarly familiar. This tactic echoes recusal demands mounted by major tech companies during the Biden era against the FTC’s Lina Khan and the DOJ’s Jonathan Kanter. In those cases, the demands essentially amounted to arguing that a documented record of challenging monopoly power constituted prejudice.
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IMPLICATIONS FOR PRESS FREEDOM
As noted in June 2026 analysis by Labyrinth Insights, press freedom concerns in the second Trump administration have significantly raised the salience of media consolidation as a political issue. During the bidding war over WBD, Paramount under David Ellison was widely seen as the party courting the administration's support. On July 14, Rep. Jamie Raskin (D-MD), the leading Democrat on the the House Judiciary Committee, wrote to Ellison over the company's alleged pressure on CBS News to air content favorable to Trump, specifically citing the editor-in-chief Bari Weiss’ alleged demands that a now-fired 60 Minutes journalist make pro-immigrant rights protestors “look more violent”. Raskin argued that Paramount’s editorial decisions appeared to amount to "collu[sion] with the Trump Administration to curtail media independence, promote political and ideological censorship, and stifle dissent." Since the states launched their merger challenge, Paramount investors have filed their own lawsuit over corporate leadership’s allegedly illegal collusion with the Trump administration.
The proposed merger is backed by some $24 billion in equity financing by sovereign wealth funds in the Middle East linked to governments with documented records of suppressing press freedom. Should the deal close, both CNN and CBS News would be put in an ownership structure partially capitalized by authoritarian states such as Saudi Arabia, a longtime target of human rights groups. Several Senate Democrats raised concerns in a letter over the prospect of autocratic states including Qatar and the United Arab Emirates (UAE) commanding “unprecedented influence over a media conglomerate vital to American journalism and culture”. Paramount’s willingness to court capital tied to governments with documented histories of suppressing dissent, while threatening to leave a jurisdiction over an elected attorney general’s decision to enforce antitrust law, reflects a company that prioritizes market dominance over democratic principles.
IV. Conclusion
Paramount’s reported threat to move its headquarters in apparent retaliation against California’s antitrust efforts is revealing. Instead of working to assure critics that the merger will not undermine competition, the company is likely to only embolden further criticism of its market power. Taken together, these tactics suggest a company that considers itself large enough that its presence in the nation's most populous state (and home of its film industry ‘capital’) is a privilege it can revoke if forced to comply with the law. Furthermore, these tactics are unlikely to reassure critics concerned that the merger will reduce opportunities for Hollywood’s workforce and undermine press freedom. Instead, Paramount’s behavior stands to raise further questions about its long-term commitment to the state’s film economy, itself an increasingly visible issue in local politics in the state.
The merger's potential to raise subscription prices and limit consumers' choices arrives at a time when Americans are increasingly sensitive to “funflation”: Consumers already struggling to afford basic necessities are frustrated that leisure and entertainment choices are becoming more unaffordable. This, combined with the obvious political implications of Paramount taking control of CNN and CBS, makes the anti-monopoly cause in this case unusually legible to ordinary Americans. The current coalition of 12 states challenging the merger may ultimately grow should the recent history of antitrust litigation be a guide, and so too may public opposition as the deal’s harmful implications for subscription costs, creative workers' livelihoods, and press independence become apparent.
V. Additional Citations
The case was reassigned to Judge Araceli Martinez-Olguin of the District Court for the Northern District of California. See: Jill Goldsmith, "Deere settles right to repair dispute with FTC," July 15, 2026, Deadline, https://deadline.com/2026/07/paramount-new-judge-state-ags-antitrust-suit-warner-bros-merger-1236983569
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Aidan Smith
Founder, Labyrinth Insights
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