Why a 1963 bank case should not decide the Paramount/Warner deal
In United States v. Philadelphia National Bank, the Supreme Court blocked two banks from merging at a time when the market was simple to measure.
A 1963 Supreme Court ruling is now being used as legal ammunition in the fight over the Paramount/Warner Bros. Discovery merger, despite the Justice Department's approval. Twelve state attorneys general are suing to block the deal, citing the PNB case as their guiding precedent. The case originated from the local and predictable market of brick-and-mortar banking, where the Court set a 30% market-share threshold to determine if a merger would substantially lessen competition.
However, applying this 30% threshold to the modern entertainment market, which includes streaming, YouTube, and sports rights, has been criticized by legal scholars as a fatal flaw. The states have used a narrow market definition to trigger the structural presumption of harm, which is exactly the kind of abuse that has led scholars to argue PNB should be overturned.
While the case raises questions about the merger's impact on competition, the need for the studios to compete with tech platforms like Netflix, Amazon, and YouTube should also be considered. The competitive dynamics and the potential benefits of the merger for viewers should not be ignored.
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