Paramount Argues States’ Antitrust Suit Will ‘Collapse Under Scrutiny’

Paramount‘s lawyers filed a legal response to the states’ antitrust lawsuit against the Warner Bros. merger on Friday, sketching out arguments and defenses it may use at a trial next March.

Among other defenses, Paramount’s lawyers said they may claim that the coalition of 12 states lacks the authority to regulate the merger, “which is vested in the U.S. Department of Justice.”

Paramount also noted that Cinema United, the trade group for theater chains, has called for a settlement.

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“Day by day, the weak case against this Merger gets even weaker,” the company argued, adding that the it also plans to challenge the states’ market definitions. “Plaintiffs’ case amounts to a series of attempted shortcuts and assumptions that collapse under scrutiny.”

California led the state coalition in suing to block the merger in July, arguing that the deal will create unlawful concentration in the basic cable market and in the wide-release and blockbuster theatrical markets. The DOJ had earlier approved the merger, issuing a memo laying out its reasoning for why the deal should go forward.

States typically work with the DOJ in antitrust cases, but under the Trump administration California and several others have often charted their own course.

Paramount has repeatedly argued that the deal will be pro-competitive, and will result in more movies and TV shows.

In its answer to the complaint, the company denied the states’ allegations — a requisite formality to establish a legal controversy. The company also added a few pages of argument, alleging that the states’ case ignores the broader context of an industry in rapid transition to streaming.

“The way audiences consume content is changing rapidly. Streaming services now have greater viewership than movie theaters and cable television,” Paramount argues. “Plaintiffs’ case depends on ignoring this reality. It involves a series of gerrymandered markets based on cherry-picked data from the past. The alleged markets are not the product of sound economic analysis or current market realities. They have been invented for one purpose and one purpose only: to trigger a presumption — any presumption, no matter how weak — in the hopes the Court will look no further.”

The Writers Guild of America has filed its own lawsuit arguing that the merger will reduce the marketplace for writers’ work. That case is set to be heard alongside the states’ challenge at trial on March 2.

Paramount has agreed not to close the deal until a ruling is issued after the trial — though it is asking the court to require the plaintiffs to post a $1.88 billion bond as the price of continuing the litigation. A judge is set to hear arguments on that request on Sept. 24.