Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Iowa and Montana sue states opposing Paramount-Warner Bros. merger, (Aug 27, 2026)

By Justin Marcus Smith, J.D.

Iowa and Montana contend that the Supreme Court is the only forum that can resolve disagreement with the twelve states that have “effectively vetoed a transaction that the other thirty-eight, and United States, declined to challenge.”

Despite U.S. and international regulatory approval of Paramount Skydance’s proposed acquisition of Warner Bros., the states of Arizona, California, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington (defendant states) filed suit to block the merger in the U.S. District Court for the Northern District of California in July. The states of Iowa and Montana (plaintiff states) are now seeking leave to file a Bill of Complaint with the United States Supreme Court to stop the district court merger blocking effort of the defendant states. The plaintiff states complain of harm to their own state economies, despite the approval of their own regulators, as the defendant states continue their efforts to block the deal. The proposed Bill of Complaint includes two counts, one for declaratory judgment, the other for injunctive relief (State Of Iowa v. State Of Arizona, No. 220164 (U.S. Aug. 27, 2026)).

Background. In June 2026, the U.S. Department of Justice Antitrust Division announced that it closed its investigation into Paramount Skydance’s (Paramount) proposed acquisition of Warner Bros. Discovery (Warner Bros.). After an eight-month investigation, the DOJ said it found the transaction is not likely to harm competition or American consumers. More specifically, the Antitrust Division concluded that the merger would not likely reduce competition in streaming video-on-demand, linear television, or the development, production, and distribution of films for theatrical release. Instead, the Antitrust Division found that the combined company could provide a stronger competitive alternative to larger streaming platforms, that linear television already faces robust competition from streaming and other live-programming alternatives, and that theatrical film markets remain dynamic and competitive, with traditional studios, newer entrants, and independents continuing to expand output and distribution.

In July, the European Commission green-lighted the deal conditioned on full compliance with commitments that include termination of Paramount’s stake in UIP, a film distribution joint venture.

Jurisdiction. Iowa and Montana (plaintiff states) contend that the Supreme Court is the only forum, pursuant to Article III, § 2, clause 2 of the U.S. Constitution, that can resolve the disagreement with the twelve states that have “effectively vetoed a transaction that the other thirty-eight, and United States, declined to challenge.”

General allegations. The plaintiff states noted that competition from streaming services caused substantial declines in revenue and mounting debt at Warner Bros., yet the company has valuable media assets and a considerable movie and television back catalog.

Paramount outbid Netflix, and the plaintiff states emphasize their understanding that Paramount has committed to expand output post-merger. In their estimate, the combined firm “expects the scale necessary to invest more in the markets Defendant States say will be harmed.” Meanwhile, the Paramount deal includes a $7 billion payment to Warner Bros. if regulators block the merger. Accordingly, the plaintiff states note “Paramount will pay Warner Bros. about $7 million per day starting in October to compensate for the substantial costs that delay and uncertainty produce for Warner Bros.” The plaintiff states elaborated at length about all kinds of harms posed by delay of the merger, noting in particular corporate uncertainty resulting from the defendant states’ district court case against the merger and concomitant harm to the pace of investment, hiring, and their own state economies.

The plaintiff states reviewed how the DOJ, which had “extraordinary ability” to scrutinize not only the deal itself, but also the bidding process and the Netflix deal, concluded the merger would increase competition with benefits for American consumers and workers. “In each market, DOJ found benefits.” Competition authorities across the world agreed, and multiple states also conducted their own investigation. Most of those states, including the plaintiff states, decided not to file suit to block the merger.

The defendant states, in contrast, “departed from the consensus” but “did not claim they had found new evidence or that they were applying a different legal standard.” Instead, “their theory was political” that Paramount and its CEO, David Ellison, “cut a corrupt deal with President Trump to allow the merger.” Notably, in the plaintiff states’ view, the defendant states “never explained what connection there is between their [publicly aired] concerns about news coverage and any genuine antitrust harms.” The defendant states’ district court lawsuit itself “does not allege harm in the news market.”

Declaratory judgment. The plaintiff states claimed that the defendant states’ enforcement efforts are “not a natural application of the Clayton Act” but instead a politically-motivated impermissible “veto” of a lawful media transaction. The plaintiff states called for declaratory relief insofar as the defendant states’ suit “burdens the national economy, harms Plaintiff States’ quasi-sovereign interests, and conflicts with the federal antitrust enforcement regime.”

More specifically, the plaintiff states asked the Supreme Court to declare that “the Defendant States’ suit may not be maintained, or, in the alternative, settle, definitively and without rushed appeals here, whether the Paramount-Warner Bros. merger violates the Clayton Act.”

Injunctive relief. Insofar as the plaintiff states are “suffering and will continue to suffer irreparable injury” in the forms of deferred hiring and the like, in their view, no remedy at law would be adequate. Therefore, the plaintiff states call for the Supreme Court to “enjoin the Defendant States’ suit and decide the issue for itself, ensuring a prompt and fair adjudication of the merger.”

Prayer for relief. The plaintiff states respectfully asked the court to:

1. grant leave to file the Bill of Complaint and exercise original and exclusive jurisdiction;

2. declare that the defendant states may not obtain an injunction against the Paramount-Warner Bros. merger;

3. declare that the merger “does not violate the Clayton Act”;

4. enjoin the defendant states from seeking to continue their suit against the merger;

5. grant any and all other proper relief;

6. expedite consideration due to the major costs of delay;

7. hold oral argument to decide Supreme Court jurisdiction over the case.

The Case is No. 220164.

Attorneys: Brenna Bird, Iowa Attorney General's Office, for the State of Iowa. Ashley C. Keller (Keller Postman LLC) for the State of Arizona.

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