World
US approves Paramount-Warner Bros. $110 billion merger, as state lawsuits loom
The US Department of Justice’s Antitrust Division said Friday it has cleared Paramount Skydance Corp’s planned $110 billion acquisition of Warner Bros. Discovery, saying it was unlikely to harm competition or consumers.
DOJ said it spent eight months evaluating how the transaction would affect streaming video services, traditional television and the film industry, weighing input from across the entertainment industry.
“The extensive investigatory record reviewed by the Division suggests that the impact of the transaction will be to increase competition across the media and entertainment ecosystem, with benefits for American consumers and workers,” the Justice Department wrote in a statement.
Read more: What a Paramount-Warner Bros. merger could mean, including for coverage of Israel
Paramount CEO David Ellison’s father, billionaire Oracle co-founder Larry Ellison, has cultivated ties with US President Donald Trump, and the company has hired former Trump officials.
Assistant Attorney General Omeed Assefi had said that politics would “absolutely not” drive the DOJ’s review of the transaction.
Competition for audiences, talent, investment
Paramount issued a statement thanking the DOJ for its review of the transaction, which it said would allow the company to better compete in an industry defined by an intense scramble for audiences, talent, technology and investment.
“We remain focused on completing the transaction as soon as possible and delivering its benefits to consumers, creators and the entertainment industry as a whole,” Paramount said.
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 $110 billion deal.
Democratic senators raised concerns about Middle Eastern sovereign wealth funds and Chinese companies taking part in the deal. They noted that it involves sovereign wealth funds from Saudi Arabia, Qatar and Abu Dhabi investing in a company that would control CBS stations, as well as major cable news operations including CNN. They also cited media reports that China’s Tencent may take part.
The family of Paramount CEO David Ellison will continue to control voting shares.
Paramount said in a filing on Thursday that the “new foreign investors, which will receive only non-voting equity, will not have any ability to influence the company’s editorial decision-making.”
The DOJ said it reviewed more than 2 million documents obtained from 80 sources in evaluating the deal’s impact on various segments of the entertainment industry.
It concluded that a combined Paramount+ and HBO Max would create a stronger alternative to larger streaming services and increase competition in a way that would benefit consumers.
The deal is unlikely to harm the traditional television business, where there is vigorous competition for live sports, news and political commentary, the DOJ found.
The theatrical business is similarly seeing more robust competition, as Paramount and Warner Bros compete not only with traditional Hollywood rivals, but with smaller independent studios such as A24 and newcomers such as Apple and Netflix, which have signaled continued interest in theatrical releases, wrote the DOJ.
Since the deal was announced, theatrical production has increased, it found.
The DOJ dismissed comparisons to the $71 billion merger of Walt Disney and Twenty-First Century Fox, which closed in 2019, a year before the COVID-19 outbreak triggered dramatic changes in audience consumption patterns. Disney has substantially increased its spending on content in the years since, the DOJ found.
However, several in Hollywood — including actors, directors, writers and producers — have expressed concern that the merger would result in fewer jobs and less diversity of storytelling.
California, New York and other US states are preparing a lawsuit to block the deal, sources familiar with the matter told Reuters last week.
California Attorney General Rob Bonta posted on X that the proposed merger of Warner Bros and Paramount “remains under investigation by my office.”
