California and eleven other states filed a lawsuit to block Paramount from merging with Warner Bros. Discovery. The states believe combining two companies that produce content nobody watches will somehow create a monopoly on content nobody watches.
Paramount owns Paramount+. Warner Bros. Discovery owns Max. If you can name three shows on either platform without googling, you're lying.
The lawsuit argues the merger would reduce competition in the streaming market. The streaming market currently features seventeen different services charging you $15 each to watch one show per platform. Reducing that number by one would apparently destroy consumer choice. The other fifteen services charging you $15 to watch one show will continue operating as usual.
Retail traders heard "merger blocked" and immediately bought call options on both companies. They reasoned that if the merger fails, both stocks will tank, which means calls will print. This is the same logic they used when buying GameStop at $380.
Warner Bros. Discovery is worth $20 billion. Paramount is worth $8 billion. Together they would be worth $28 billion, which is less than Netflix spends on shows you add to your list and never watch. The states fear this combined entity would control too much of the market for prestige dramas that get cancelled after one season.
The lawsuit cites concerns about content licensing and distribution power. Both companies currently license their content to nobody because they pulled everything back to their own platforms. Combining them would allow them to continue licensing their content to nobody, but with greater efficiency.
If the merger goes through, the new company will own both the Paramount lot and the Warner Bros. lot, giving them a monopoly on filming locations where nobody is currently filming anything.
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