The Justice Department's Antitrust Division on Friday closed its investigation of Paramount Skydance's roughly $110 billion acquisition of Warner Bros. Discovery, removing the largest federal obstacle to a deal that would put CBS, CNN, HBO Max, the Warner film studio and the Paramount and Nickelodeon networks under a single owner. The division said the transaction "is not likely to result in harm to competition or American consumers."
The clearance moves Paramount, run by Chief Executive David Ellison, within reach of a September close that Ellison told investors in April would precede a so-called ticking fee that makes the deal more expensive the longer it drags. Warner Bros. Discovery shareholders have already approved the merger, and Australia's competition regulator signed off this week. Paramount shares rose about 3 percent in after-hours trading.
What the division found
The eight-month review examined more than 2 million documents from 80 custodians and concluded the combination would not reduce competition in streaming, linear television or studio production and distribution of theatrical films. "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 division said.
On the worry that fewer studios would mean lower pay for actors and writers, the division was equally direct. "Instead, the evidence shows extensive competition within the industry, which has generated greater output and diversity of film offerings, and is likely to continue unabated," it said.
How the deal got here
Paramount offered $31 a share for Warner Bros. Discovery in late February, beating an $83 billion bid from Netflix for the company's streaming and film assets. The combined company would own the Warner library behind the Harry Potter franchise, the DC Universe and Game of Thrones, alongside Paramount's Mission: Impossible catalogue and SpongeBob SquarePants.
A Paramount spokesperson said the agreement 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."
The counterpoint
State attorneys general and Democrats in Congress argue the federal review understates the risk of merging two of the largest U.S. entertainment companies. California Attorney General Rob Bonta said Friday the deal "remains under investigation by the California Department of Justice." Sen. Elizabeth Warren of Massachusetts urged state officials to block it, calling the clearance "terrible news for every American who doesn't want Trump-aligned billionaires to control what they watch and how much they pay" and saying the agreement "has reeked of corruption and influence-peddling." Last month, Reps. Sam Liccardo of California and Deborah Ross of North Carolina joined three European lawmakers in a letter to Ellison questioning the merger's effect on news and programming.
Ellison's father, Oracle Chief Executive Larry Ellison, is a prominent Republican donor, and CBS News, which Paramount owns, has moved away from the left under the younger Ellison, the Washington Examiner reported. Critics have tied that political coloring to the federal willingness to clear a transaction that would put CNN and CBS News under common ownership.
The European Union's competition arm began its own review this week and set a July 14 deadline for an initial decision. State challenges, if filed, would land in the weeks after.