DOJ Approves Paramount's $110B Warner Bros. Acquisition

The U.S. Department of Justice has approved Paramount Skydance's $110 billion acquisition of Warner Bros. Discovery, removing a major federal obstacle to the merger, according to multiple reports.

The DOJ's Antitrust Division concluded that the deal is 'not likely to result in harm to competition or American consumers,' following an extensive eight-month review. The transaction aims to combine two of Hollywood's largest entertainment companies, with Paramount owning CBS and Warner Bros. overseeing HBO and CNN.

Paramount Skydance celebrated the DOJ's decision, stating that the merger will 'increase competition across the media and entertainment ecosystem,' per CBS News. The company expressed its commitment to completing the transaction swiftly and delivering benefits to consumers, creators, and the industry. However, potential legal challenges remain from state attorneys general, including California Attorney General Rob Bonta, who continues to investigate the deal.

The merger has faced criticism from lawmakers such as Massachusetts Senator Elizabeth Warren and prominent figures in Hollywood, who argue that it could lead to lower pay for actors and writers. The DOJ rejected these concerns, asserting that the evidence shows extensive competition within the industry. Additionally, the European Union is reviewing the proposed deal, with a July 14 deadline set for vetting.

The Justice Department emphasized that career antitrust regulators had performed a rigorous review, sifting through some two million documents from dozens of sources. They conducted meetings and deposed senior-level executives and other witnesses. The DOJ's four-page closing statement highlighted that the film and television industry is highly dynamic and that the proposed transaction is not likely to harm competition or American consumers.

Regulators focused on three potential areas of concern: streaming video-on-demand market, traditional linear television channel space, and studio development, production, or distribution of films for theatrical release. The antitrust division found that competition in these areas would not be harmed by the merger. Paramount aims to finalize its purchase by September.

According to Sky News, regulators concluded that the merger is likely to increase competition in video streaming and linear TV, citing strong competition for live programming. The DOJ also determined that YouTube, TikTok, and other social media portals do not appear to be competitive substitutes under well-established antitrust legal precedents.

The Federal Communications Commission has not yet approved a petition seeking approval for foreign interests, including Gulf sovereign wealth funds, to own up to 100% of the debt in the proposed $110bn deal. Democratic senators raised concerns about Middle East sovereign wealth funds and Chinese companies taking part in the deal.

Paramount stated that new foreign investors will receive only non-voting equity, ensuring they won't influence the company's editorial decision-making. The DOJ reviewed over 2 million documents from 80 sources to evaluate the deal's impact on various segments of the entertainment industry.