Justice Dept. approves Paramount’s acquisition of Warner Bros.
The U.S. Justice Department has cleared the way for Paramount Skydance’s $111-billion purchase of Warner Bros. Discovery — a major milestone that moves David Ellison closer to his goal.
After a months-long review, Justice Department antitrust regulators on Friday concluded the combination would not violate federal anticompetition laws. Approval had been expected because President Trump — who has friendly ties with Ellison and his father, tech billionaire Larry Ellison — favors the deal.
The government stopped short of asking Paramount to make concessions or divestitures.
Buying Warner Bros. would allow Paramount — Hollywood’s smallest major company — to bulk up with such prestigious properties as HBO, CNN, HGTV and Food Network. Those would be combined with properties Paramount already owns, including CBS, Comedy Central, Nickelodeon and MTV.
The deal would put two historic film studios and two prominent news organizations under the same roof. It would give Paramount four streaming services, including HBO Max, and dozens of cable channels.
In its four-page closing statement, the Justice Department emphasized that career antitrust regulators — not political appointees — had performed a rigorous review, sifting through some two million documents the government received from dozens of sources, including third-party organizations.
They conducted meetings and deposed senior-level executives and other witnesses.
“These investigative efforts all led to the same conclusion: the film and television industry is highly dynamic, and the proposed transaction is not likely to harm competition or American consumers,” Justice Department regulators wrote in their summary.
Regulators zeroed in on three potential areas of concern. They looked at whether the merger would give Paramount too much power in the streaming video-on-demand market; the traditional linear television channel space; as well as in “studio development, production, or distribution of films for theatrical release,” the Justice Department said.
Competition in streaming would not be crimped, according to the regulators.
“To the contrary, the combined firm is likely to increase competition by offering consumers a more robust competitive alternative to the larger [streaming] offerings,” they wrote.
The antitrust division also found that theatrical distribution and opportunities for creators, including writers and actors, would not be harmed as long as the combined company maintained current production levels.
Ellison has promised to continue releasing 30 films a year with a combined Warner Bros.-Paramount studio. He also has said he would protect the HBO brand.
The proposed merger is controversial because many in Hollywood fear it will bring thousands of job losses, which was the result of past consolidations, including Walt Disney Co.’s 2019 takeover of Fox entertainment properties. More than 5,000 entertainment industry workers, including Jane Fonda, J.J. Abrams, Javier Bardem and Mark Ruffalo, have signed an open letter calling for the merger to be blocked.
There’s a political dimension as well. Paramount’s standing with the Trump administration (Paramount+ is set to televise Sunday’s UFC fight spectacle at the White House to celebrate Trump’s birthday as part of the company’s relationship with the UFC) has given left-leaning groups pause.
They worry about collapsing CNN and CBS News into one unit, particularly after all the turmoil that has ensued at CBS News since the Ellison family bought Paramount in August and installed Bari Weiss as CBS News editor in chief.
This month witnessed a dramatic shakeup at the iconic “60 Minutes,” with top executives and three well-known correspondents tossed out.
“We’ve already seen how far Paramount and the Ellison family are willing to go to diminish a once-proud network and news organization like CBS,” Craig Aaron, co-chief executive of the progressive group Free Press, said in a statement. His group fears the Ellisons would “do worse if they get their hands on Warner Bros., HBO, CNN and all the rest.”
Paramount, for its part, said it was grateful for “the Department of Justice’s thorough review of this transaction, as well as the work of the other agencies that have completed their reviews and provided clearance to date.”
“This deal is pro-competitive, resulting in a stronger company better positioned to compete against dominant technology platforms in an industry increasingly defined by intense competition for audiences, talent, technology, and investment,” Paramount said. “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 wants to finalize its purchase by September.
With Friday’s victory, Paramount is staying on that timetable, but regulators in Europe and Britain have opened their own regulatory investigations and are expected to make their own determinations in the coming months.
Separately, California Atty. Gen. Rob Bonta and other state attorneys general have been scrutinizing the proposed merger, and are widely expected to file a lawsuit, perhaps as early as this month, to try to block it.
Paramount applied for Justice Department approval in December — more than two months before it edged out Netflix in the Warner sweepstakes.
In its statement, the Justice Department said it began its review last fall when it was clear Warner Bros. was in play. Regulators said they were familiar with Warner’s businesses, because the division had scrutinized four other mergers involving the company, dating back to the disastrous AOL-Time Warner merger in 2001.
Paramount’s deal would mark the third time Warner has changed hands in the last decade. AT&T bought the company in 2018 and then sold it to the smaller Discovery four years later. That deal left Warner Bros. burdened by debt, setting the stage for the Ellison takeover.
Justice Department approval could complicate efforts by Bonta and other state attorneys general to block the deal. Should Bonta or others sue, they would have to convince a judge that the nation’s top antitrust regulators failed to make a proper finding despite their lengthy review.
That may pose a high bar for the state officials, who are facing political pressure to stop the deal.
“State AGs must block this merger,” U.S. Sen. Elizabeth Warren (D-Mass.) said in a statement Friday, adding that the Justice Department’s approval was “terrible news for every American who doesn’t want Trump-aligned billionaires to control what they watch and how much they pay.”
The Justice Department said state attorney general offices had participated in its investigation, which allowed federal and state officials “to share information with each other and for the States to attend and participate in the [antitrust] Division’s depositions.”
Last month, David Ellison appeared before the regulators in a two-hour session.
Paramount’s Chief Legal Officer Makan Delrahim, who previously served as the nation’s top antitrust regulator during the first Trump administration, also was busy quarterbacking Paramount’s outreach with regulators.