Paramount Skydance Merger With Warner Bros. Discovery Won’t Harm Competition, Consumers, DOJ Says
washington:US Department of Justice Paramount Skydance’s Warner Bros. Its investigation into the proposed acquisition of Discovery determined that the massive Hollywood media merger was unlikely to harm competition in the industry or harm consumers.
The agency said Friday that it had completed its investigation into the deal and that regulators in its antitrust division concluded that the impact of the merger “will increase competition in the media and entertainment ecosystem in a way that will benefit American consumers and workers.”
David Ellison’s Paramount Skydance will be released by Warner Bros. in late February. Reached an agreement to acquire Discovery. Paramount’s victory came after months of negotiations and a rival bid from Netflix that ultimately fell short. Paramount was acquired by Skydance last year.
The companies argue that the merger, especially if the HBO Max and Paramount+ libraries are combined, will be good for growth in the industry and give consumers access to more content. But critics have criticized what further consolidation could mean in an industry currently controlled by just a few big players.
Among the possible market impacts of the merger, regulators considered whether the deal would harm competition in streaming video. They concluded that the merger would likely increase competition by providing customers with a more “robust, competitive alternative” to larger video streaming alternatives.
The agency also determined that YouTube, TikTok, and other social media portals that also offer streaming video content “do not appear to be a competitive alternative under established antitrust legal precedents here, although they compete broadly for consumer attention.”
Regulators also concluded that the merger was unlikely to harm competition from so-called linear television, citing strong competition in live programming.
Regarding the antitrust issue in Hollywood, regulators have determined that a merger of two major movie studio operators is unlikely to harm competition in studio development, production or distribution of theatrically released films.
“Instead, the evidence shows intense competition within the industry creating greater output and diversity of film presentation, which is likely to continue unabated,” the regulators concluded.
Thousands of actors, directors, writers and other industry professionals voiced their “firm opposition” to the Paramount deal, arguing that further consolidation would lead to job losses and fewer options for filmmakers and moviegoers. Many MPs were similarly alarmed.
Ellison, chief executive of Paramount Skydance, vowed to keep Paramount and Warner Bros. as independent film studio operations and promised to release a total of 30 films a year in theaters. Paramount acknowledged that the merger would also result in significant disruptions due to duplication.
While the Trump administration’s Justice Department confirmed it would not object to Paramount’s $81 billion acquisition of Warner, the megamerger is still being reviewed by other regulators in the U.S. and abroad.
California Attorney General Rob Bonta has been particularly vocal about this transaction, saying his state is investigating it.
European regulators as well as the US are investigating the deal. The European Commission has set July 7 as a provisional deadline for its review. The UK’s Competition and Markets Authority aims to make its first decision on the investigation in early August.
Paramount and Warner have previously said they hope to complete their deal in the third quarter of this year. And that clock is ticking. Paramount has promised to pay shareholders some compensation in the form of a “business fee” of 25 cents per share for each quarter after that date if the acquisition is not completed by September 30. He also agreed to a $7 billion statutory termination fee.
