California has moved to closely examine Paramount Global’s successful bid to acquire Warner Bros Discovery, with state officials warning they will pursue a forceful review that could complicate or even block the transaction.
State Attorney General Rob Bonta announced that California is already investigating the proposed acquisition and pledged a "vigorous" examination of the deal. The announcement followed news that Paramount had outbid streaming rival Netflix in the long-running contest for control of the storied Hollywood studio.
Industry observers and analysts flagged California as the most consequential potential hurdle, particularly because the state stands to lose jobs and economic activity if Paramount implements the $6 billion in cost "synergies" it projects from the combination. In practice, synergies of that magnitude frequently translate to large-scale layoffs, the elimination or significant downsizing of entire business units, and consolidation of suppliers and contractors - outcomes that would be materially adverse for California’s economy.
Despite concerns at the state level, several market watchers expect federal regulators to be more permissive. Analysts at TD Cowen said that state intervention to block the transaction is "very likely," while also arguing that "approval from federal regulators seems likely given the political environment." That view rests in part on Paramount’s close political connections to the Trump administration, which market participants say could ease its path through Washington.
Paramount initially submitted an offer that Warner Bros Discovery’s board considered inferior, but the company gained ground by escalating its bid and by rallying political resistance to Netflix’s competing offer among Republicans in Washington. Now, with both California Attorney General Bonta and Governor Gavin Newsom - both Democrats - watching closely, the state could become the central battlefield for regulators and advocates concerned about the deal’s local impact.
Newsom has positioned himself as a prominent opponent of the former administration’s policies, and his profile as a potential 2028 presidential candidate has made his stances on national issues more visible. Bonta, meanwhile, has a record of suing the federal government over policy decisions made during the Trump administration on matters including clean energy, pipeline projects and health funding.
Echoing calls for scrutiny, U.S. Senator Adam Schiff, a California Democrat, said that "what was true for Netflix is still true now for Paramount," and urged that the transaction be reviewed at "the highest levels of scrutiny."
California has a history of challenging large mergers. In 2019 the state led a coalition of jurisdictions opposing T-Mobile’s acquisition of Sprint; although the states ultimately lost in court, California negotiated a settlement that recouped costs and secured temporary commitments aimed at preserving jobs and expanding low-cost consumer options. The state also worked with federal enforcers to block Kroger’s proposed acquisition of Albertsons.
At the same time, Bonta’s office has criticized some merger settlements even when they cleared the way for transactions. California is participating in a coalition of 13 states that opposed a Justice Department settlement permitting Hewlett Packard Enterprise’s $14 billion acquisition of Juniper Networks.
The attorney general’s antitrust team has expanded in recent years, led by antitrust head Paula Blizzard, a veteran enforcer who previously worked at the Department of Justice and at the Federal Communications Commission - the agency that oversees federal rules for broadcasters.
Spokespeople for both Warner Bros Discovery and Paramount did not immediately respond to requests for comment.
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