A federal judge on Monday paused Paramount Skydance’s acquisition of Warner Bros. Discovery while she considers antitrust claims by Democratic Attorneys General — a rare instance of a court actually doing its job. The judge looks past the narrow Big Screen to see a predator absorbing what’s left of the middle market.
Twelve states have challenged Paramount’s $110 billion deal to buy Warner Bros. under the Clayton Act. Their claims of competitive harm are as concrete as the industry consolidation they identify, including that the deal will reduce already-dwindling diversity in viewpoints. Their main argument — that combining two of the last major film studios will reduce competition in theatrical releases — is exactly the sort of merger the law was written to stop.
Judge Araceli Martinez-Olguin ruled that the states were likely to succeed on this point based on the Herfindahl-Hirschman Index, a standard tool that measures market concentration. “A significant increase in the concentration of firms in that market establishes a presumption that the merger will substantially lessen competition,” the judge writes — a straightforward application of the law as written, not some novel theory.
She notes that the two companies combined will likely have a 27% market share for wide-release theatrical distribution. That’s significant, especially when Disney’s share hovers in the same range. According to the AGs’ calculations, the merger would raise the HHI from 1,715 by 359, to a post-merger index of 2,074. Prior to 2023, the Justice Department had considered an HHI between 1,500 and 2,500 “moderately concentrated.” The Biden team’s revised merger guidelines sensibly lowered those thresholds, and the court rightly applied them regardless of their formal status. The judge held that the states “make a strong showing that the Transaction will substantially lessen competition.” She’s right.
And why does the HHI still matter? Because it measures the reality its critics want to wish away: concentration of market power. The formula dates to 1945, which in antitrust circles means it predates the Borkian revolution that reframed the entire enterprise around “consumer welfare” — meaning prices, not power — and thereby licensed every wave of media consolidation we’ve seen since. The HHI’s results depend on market definition, but that is the point of the inquiry, not an argument against it. Define the market honestly and the index tells the truth.
The AGs and the judge are right to exclude film production for the far-larger streaming market, because that market is already owned by the very firms the theatrical consolidation feeds into. The total domestic box office last year was $8.9 billion — a fraction of Netflix’s $45 billion and Disney Plus’s $12 billion. Paramount’s own streaming service pulled in $7 billion. That’s the problem, not a solution. The streaming giants use their scale to extract content at favorable terms from the very studios the merger would consolidate. The narrow theatrical market is where independent production still has a shot at being seen; handing two more studios to a Paramount-Warner behemoth closes that window further.
The AGs and judge aren’t Norma Desmond clinging to a bygone era. They’re defending what’s left of a distribution channel that still lets something not pre-sold to a streaming service reach an audience. The same is true of the deal’s union opponents: they worry a merger means fewer mid-budget movies, fewer jobs, and fewer paths for work not already greenlit by a streaming algorithm.
AMC Theaters CEO Adam Aron supports the deal because he needs product in his theaters and cannot afford to lose two major suppliers. That is not market confidence; it is chain-store desperation. Paramount will have an opportunity at a hearing next month to make its case — as it should, subject to scrutiny that matches the size of the deal.
As for the many-sources-of-news point: the multiplicity of news sources is exactly why concentration matters more — fewer independent ownership hands means the remaining outlets carry outsized voice. Declining audiences make networks cheaper to acquire and easier to capture, not less threatening. And the lackluster performance of CBS under current ownership signals that a new owner, hostile to the newsroom’s independence, will have every incentive to reshape it aggressively. These aren’t reasons to relax. They are reasons to insist on scrutiny.
As for the AGs, their larger goal is to prevent Paramount CEO David Ellison from consolidating yet another major news outlet under a single owner — particularly CNN, which a media mogul with clear political ambitions can steer. Mr. Ellison has catered to President Trump with his choice of Bari Weiss to run CBS, and Democrats fear the impact of a combined CBS and CNN. If that is using antitrust as a political weapon, it is the right weapon for the right fight. Concentration of news media is the original monopoly problem democracy was supposed to solve.
The combined company would have a monumental debt load, which its private-equity architects will treat as an extraction opportunity, not a constraint. It may be a bad business deal. That is exactly why antitrust policy exists to stop it before the debt is loaded onto the workers and the public.
