Paramount wins DOJ approval for Warner Bros. Discovery merger as $7 million daily fee deadline looms

US Justice Department says David Ellison’s Paramount Skydance is owned by Warner Bros. formally approved its acquisition of Discovery for approximately $110 billion; This cleared the most significant federal regulatory hurdle in a merger that would be among the largest media consolidations in American entertainment history.

DOJ rules out harm to consumers and competition

The Justice Department completed its antitrust review on Friday and determined that the proposed union poses no meaningful threat to streaming, traditional television and cinema. “The Division has completed its analysis of the proposed merger of Paramount and Warner Bros. and, based on the evidence obtained in its investigation, has determined that the transaction is unlikely to harm competition or American consumers,” the department said in an official decision. he said.

He also directly addressed concerns that consolidation could limit Hollywood’s output, stating that “substantial evidence does not point to the possibility of a reduction in production” in creative output.

Paramount’s spokesperson said Business Content “We are grateful for the Department of Justice’s thorough review of this transaction, as well as the work of other agencies that have completed their reviews and issued permits to date,” he said.

“This deal is pro-competitive and leads to a stronger company that can better compete against dominant technology platforms in an industry defined by increasingly intense competition for audiences, talent, technology and investment,” the spokesperson added.

“We remain focused on completing the transaction as quickly as possible and delivering its benefits to consumers, creators and the entertainment industry as a whole.”

Paramount’s shares rose nearly 3% in after-hours trading after Politico first reported the federal approval.

September deadline and $7 million daily ticket price

Paramount set a target of late September to complete the acquisition; This is a timeline that comes with an increasing financial penalty.

From September 30, a toll of approximately $7 million per day will become payable for each day the process remains open, putting significant pressure on regulatory processes currently ongoing in Europe and California.

Paramount, Warner Bros. How did it outbid Netflix for Discovery?

Warner Bros. Discovery, Warner Bros. It first reached an agreement with Netflix to sell its studio and streaming assets, consisting of the studio and HBO Max, for $27.75 per share.

Paramount entered the contest with a competing bid of $30 per share for the entire company, which includes cable television networks such as CNN, HGTV and TruTV, as well as its studio and broadcast businesses. In late February, Paramount increased its offer to $31 per share, increasing competitive pressure on WBD’s board.

The board evaluated both offers in February and concluded that Paramount represented the best offer. WBD shareholders subsequently voted to approve the transaction.

California AG and AB still reviewing

DOJ clearance does not resolve all outstanding regulatory risks. California Attorney General Rob Bonta’s office confirmed that the deal “is under investigation by the California Department of Justice,” leaving open the possibility of a legal challenge at the state level that could complicate or delay the deal’s closing.

Internationally, the EU’s competition authority officially launched its review earlier this week and set July 14 as a deadline for its findings. Australia has already made a decision: The Australian Competition and Consumer Commission gave its approval this week, giving impetus to the agreement’s international regulatory reach.

What would the combined Paramount-Warner entity look like?

If the transaction is completed as planned, the combined company will have one of the broadest entertainment portfolios in the industry, spanning major Hollywood film studios, an extensive cable television operation, and two leading streaming platforms, Paramount+ and HBO Max.

The combined entity’s scale is intended to allow it to compete more directly against tech giants that are making repeated and expensive moves into the content business.