Paramount Says Regulatory Waiting Period for Warner Bid Ends

(Bloomberg) — Warner Bros. after Paramount Skydance Corp. clears U.S. antitrust hurdle. He said there were “no legal impediments” in the U.S. to closing the $77.9 billion acquisition of Discovery Inc.

Paramount said Friday that it had complied with the U.S. Department of Justice’s second claim review process under the Hart-Scott-Rodino Act and that the 10-day waiting period ended Thursday.

The end of the waiting period does not implicitly mean that regulators have reached an agreement. In the past, the department has filed suit to block mergers after the waiting period has passed.

Warner Bros. has already signed a deal to sell its studio and streaming business to Netflix Inc. for $72 billion. Earlier this week, Warner Bros. pledged to re-engage with Paramount after Paramount submitted a revised hostile offer and indicated it would be willing to increase its offer by $1 per share to $31. Warner Bros. gave Paramount until February 23 to submit its “best and last” offer.

“Paramount Skydance continues to mislead shareholders and evade the truth,” Netflix Chief Legal Officer David Hyman said in a statement Friday. “The reality is that routine HSR milestones do not indicate DOJ approval nor have any decisions been made. They have not received the necessary approvals to close and are a long way from doing so.”

In a securities filing filed Friday, Paramount said the consummation of any transaction would be with Warner Bros. It acknowledged that it is subject to “certain other conditions,” including the execution of a definitive merger agreement with , shareholder approval and regulatory approvals in other jurisdictions. Paramount said it also received permission from foreign investment authorities in Germany, and Netflix said it also took this step.

The Justice Department can then sue to block a transaction by Paramount, and has done so in other deals. Netflix and Paramount will face serious scrutiny not only in the United States but also in the European Union.

California Attorney General Rob Bonta said Friday that his office is closely reviewing the proposed acquisition of Warner Bros. by both companies.

“Further consolidation in markets at the center of American economic life does little to serve our economy, our consumers, or our competition,” Bonta said.

Paramount’s CEO David Ellison and Netflix’s co-CEO Ted Sarandos argued that their deal would pass regulatory approval. The two executives are vying for the favor of US President Donald Trump. Ellison’s father, tech billionaire Larry Ellison, personally supports Paramount’s bid and is friendly with the president. Sarandos also discussed Netflix’s offer with Trump himself, saying he was mostly concerned about the impact of any deal on U.S. jobs.

Warner Bros. and Netflix’s marriage brings its own set of regulatory issues; the most important of which is the impact of combining Netflix and HBO Max, both of which are among the top streaming platforms in the world. Netflix also collaborated with Paramount-Warner Bros. The partnership would combine two of Hollywood’s five largest studios and their distribution businesses, as well as the rival news divisions of CNN and CBS.

Showing that it has an advantage with regulators is a key part of Paramount’s strategy to thwart Netflix’s rival offering. Paramount claimed that the deal had been greenlit and Warner Bros. It argues that the waiting period is over to persuade its shareholders to vote against the Netflix transaction. Warner Bros. has scheduled a shareholder vote on the Netflix deal on March 20.

The Justice Department is conducting in-depth reviews of both the Netflix and Paramount proposals, Bloomberg News previously reported. Key constituencies in Hollywood, including talent agencies, have recently received requests for information from federal officials, and the Justice Department has called some of the nation’s largest theater chains into private talks about the potential impact of a Warner Bros. sale. Both deals faced widespread criticism from Hollywood and Washington.

Sarandos appeared before a Senate panel earlier this month to address lawmakers’ concerns about his influence on consumer choices for streaming and jobs in California.

Utah Republican Mike Lee, who chaired the meeting, said the Netflix deal raises “numerous antitrust concerns” and noted that Netflix and Warner Bros. are competing to deliver streaming content and for labor.

On Friday, Lee followed up by sending a list of questions to both companies.

Democratic lawmakers, meanwhile, also have questions for Ellison, questioning his confidence that Paramount will quickly obtain the necessary permit and that its bid won’t raise antitrust concerns.

“We can assure you that this situation raises significant antitrust concerns that the Senate has not had the opportunity to consider,” a group including Cory Booker, Chuck Schumer and Elizabeth Warren wrote in a letter to Ellison on Thursday. Lawmakers ordered Paramount to preserve all documents and records related to its bid, including communications with Trump and his entourage and Justice Department officials.

–With help from Josh Sisco.

(Updates with comments from California attorney general in eighth paragraph.)

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