Paramount Global and Warner Bros Discovery have secured clearance from the US Justice Department and from regulators in 68 jurisdictions worldwide for a $110 billion merger. However, a coalition of twelve state attorneys general have filed a lawsuit seeking to block the deal, relying on the 1963 Supreme Court case United States v. Philadelphia National Bank as their legal foundation.
The legal challenge
The 1963 decision halted a merger between two Philadelphia banks by establishing a simple rule of thumb: if a merger would give a party roughly 30% of a market, courts should presume it harms competition. The Court devised the threshold for a market that was geographically limited and product-simple, checking accounts and loans in a single city.
State officials are applying that same 30% benchmark to the entertainment sector, defining the relevant market as wide-release theatrical films and basic cable bundles while excluding streaming services, online video platforms, sports rights and other modern forms of viewing. By drawing the market lines narrowly, the states aim to trigger the presumption of antitrust harm without having to prove actual consumer injury.
Why the old rule may not fit
Legal scholars argue that the Philadelphia National Bank rule was never meant to be a blanket standard for all industries. The media landscape today is far more complex than the banking market of the early 1960s. YouTube now commands the largest share of television viewing in the United States, and streaming platforms such as Netflix, Amazon Prime Video and Disney+ dominate the majority of TV time. Live sports are increasingly streamed on digital platforms as well.
Critics say that using a static 30% threshold ignores the competitive pressures from these digital rivals. The Supreme Court has previously warned that benefits in one market cannot excuse concentration in another, but the states' approach leaves no room for a broader analysis of how the merger might strengthen competition against tech giants like Netflix, Amazon and Apple.
Potential outcomes
If a court accepts the states' argument, the merger could be blocked, leaving Paramount and Warner Bros Discovery to continue operating as separate entities. Proponents of the deal contend that a combined studio would have the scale to invest in new content and to compete more effectively with streaming behemoths.
Conversely, if the lawsuit is dismissed, the merger will proceed, creating a larger content producer that could challenge the dominance of digital platforms. The case also highlights a broader tension between federal antitrust reviews, which have cleared the deal, and state-level challenges that rely on an outdated legal yardstick.
Lawmakers and regulators have called for a modernised antitrust framework that reflects the realities of a digital economy. Until such reforms are enacted, the Philadelphia National Bank precedent is likely to remain a point of contention in high-profile mergers across the United States.