Will California try to block Hollywood’s next megadeal?

Recent years have been characterised by the decline of movie theatres, the streaming wars and labour strikes

ONE OF THE truisms of Hollywood is that the industry always seems to be in crisis. Recent years have been characterised by the decline of movie theatres, the streaming wars and labour strikes. But Tinseltown’s latest drama is worthy of its own HBO show. On December 5th Netflix struck a deal to buy Warner Bros Discovery, one of Hollywood’s few remaining studios (and the owner of HBO). This annoyed David Ellison—the boss of Paramount Skydance, another bidder—enough for him to mount a $108bn hostile takeover bid. Forget “Succession”. Call it “The Merger”. The story has everything: moguls, moviemaking and, of course, politics.

ONE OF THE truisms of Hollywood is that the industry always seems to be in crisis.

Paramount hopes to convince Warner Bros shareholders that a mega-movie studio would spook federal antitrust enforcers less than a mega-streamer. It doesn’t hurt that the Ellison family is friendly with Donald Trump, a transactional president with a history of meddling in media mergers. Netflix and Paramount are focused on getting the president, the Department of Justice (DoJ) and the Federal Trade Commission on side.

But the feds are not the only antitrust game in town. Mr Ellison and Ted Sarandos, Netflix’s co-chief executive, ignore state attorneys-general at their peril. Rob Bonta, California’s top prosecutor, is a wildcard that could kill any Warner Bros deal. During the auction, a spokesperson for his office said that “further consolidation in markets that are central to American economic life…does not serve the American economy, consumers, or competition well.”

States have a long history of antitrust enforcement. Twelve states actually passed their own competition laws before Congress got around to drafting the Sherman Act, the foundation of America’s antitrust regime, in 1890. But consolidation across industries and the growth of anti-monopolist politics among leftists and MAGA economic populists have put the issue centre-stage. States are responding in two ways: by passing laws that beef up their antitrust powers and by bringing their own cases regardless of what the feds do. “There’s more of a concern of potential under-enforcement at the federal level” during Mr Trump’s presidency, explains Prasad Krishnamurthy, a legal scholar at the University of California, Berkeley. States are ready to step in.

In 2025 eight states introduced bills that would require big firms to notify their attorneys-general before a merger. Colorado and Washington passed their measures. Colorado is leading in other ways, too (perhaps because its attorney-general, Phil Weiser, is a former antitrust lawyer). In 2023 the state passed a law that increased fines and endowed its attorney-general with more investigatory powers, among other things. Mr Weiser argues that prior to the reform his office had been handicapped in a way that had surrendered state sovereignty. Now, he says, “It’s clear we are willing and able to litigate cases on our own.” For three years the California Law Review Commission, which recommends bills to lawmakers, has been mulling whether the state should strengthen its antitrust laws. The legislature could take up the issue next year. Big firms, fearful of a balkanised antitrust landscape, will no doubt lobby hard against any reform.

There are other signs that Democratic attorneys-general, in particular, intend to prioritise antitrust enforcement. Rohit Chopra, a former head of the (in effect defunct) Consumer Financial Protection Bureau, will lead a new consumer-protection working group for the Democratic Attorneys General Association. Taking on big firms also helps ambitious attorneys-general to raise their profiles. Mr Weiser is now running for governor in Colorado, and part of his pitch to voters is that he went after “irresponsible companies that ripped off Coloradans”.

Mr Bonta may have something similar in mind. He is publicly mulling a run for governor in 2026. California’s DoJ has already sued the second Trump administration at least 48 times, and he would not pass up an opportunity to suggest that California is standing up to big companies where the president is not. Suing to stop a Warner Bros merger would endear him to Hollywood’s powerful unions, which are worried that fewer studios means fewer buyers for their members’ work. The Los Angeles chapter of the Writers Guild of America describes the studio’s potential sale as “a disaster”. Whether Netflix or Paramount prevails, the merger process will take time to play out. This is just episode one.