The U.S. Department of Justice on Friday signed off on Paramount Skydance’s $81 billion acquisition of Warner Bros Discovery (WBD), allowing the deal to move one step closer to closing.
The merger, first announced in December after a bidding war that initially involved Netflix, would bring numerous assets like CNN, CBS, Cartoon Network, Nickelodeon, Showtime, The Movie Channel, TBS, TNT Sports, Discovery Channel, Pluto TV, Warner Bros Studios, Paramount Pictures, Paramount Plus, HBO Max, BET, MTV, Eurosport and Animal Planet under a single owner.
In a statement on Friday, the Justice Department’s Antitrust Division said there was no evidence that the merger would create competitive harms in the media and entertainment industries.
POLITICO was the first to report on the Justice Department’s approval, citing people familiar with the plan, hours before the agency issued a statement on the matter.
“The Division’s mandate is to investigate and, if necessary, litigate proposed mergers that harm competition or American consumer,” the Justice Department said in its statement. “This investigation included a review of reams of documentary evidence, hours of deposition testimony of senior-level executives, interviews with third-party witnesses, and staff-led meetings with the parties themselves. 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.”
The Justice Department’s approval is unconditional, and does not require Paramount or WBD to divest assets.
The merger is “not a done deal,” California Attorney General Rob Bonta said in a statement Friday evening. His office, the California Department of Justice, continues to review the proposed deal. Earlier, Bonta told reporters that his investigators saw “red flags everywhere,” but Bonta has not committed to filing a lawsuit to block the deal. Paramount and WBD have large film studios and television production businesses in the state, and Paramount owns six licensed television stations.
“The merger…remains under investigation by my office,” Bonta said in a social media post. Earlier this month, Reuters reported several states, including California, were developing a lawsuit intended to block the deal on antitrust grounds.
The Federal Communications Commission (FCC) must also sign off on the deal, because Paramount intends to use a sizable amount of foreign financial investments to bankroll the merger. Federal rules limit foreign financial investments in companies with licensed TV stations. Paramount holds broadcast licenses for CBS and independent stations in several cities, including Atlanta, Los Angeles, New York City, Chicago, Philadelphia, Seattle, San Francisco, Sacramento, Denver, Dallas-Fort Worth, Pittsburgh, Baltimore and Boston.
European regulators are also looking at the merger, and could require divestitures of assets in numerous countries where Paramount and WBD operate. Overseas, Paramount participates in a streaming joint venture with Comcast’s NBC Universal called SkyShowtime and also owns British public service broadcaster Channel 5 and Australia’s Network 10. In several European countries, WBD owns linear TV networks with identical branding to those stateside.
