The DOJ has approved Paramount's $110 billion acquisition of Warner Bros. Discovery without any conditions.

      TL;DR: The DOJ has approved Paramount’s $110 billion acquisition of Warner Bros. Discovery without any conditions, but states led by California are preparing to file a lawsuit to block it.

      The U.S. Justice Department has granted approval for Paramount Skydance’s $110 billion acquisition of Warner Bros. Discovery, stating that the merger “is not likely to harm competition or American consumers” after an extensive eight-month antitrust review. No requirements for divestitures, behavioral remedies, or concessions were attached.

      This merger combines two of the five largest studios in Hollywood, bringing together Warner Bros. and Paramount Pictures alongside CNN and CBS, HBO and Paramount+, and numerous cable networks. Paramount outbid Netflix in a competitive acquisition process. CEO David Ellison, whose father is Oracle co-founder Larry Ellison, spoke with leading antitrust officials last month to assert that the merger would enhance Hollywood’s competitiveness against Netflix, Amazon Prime Video, and YouTube.

      The approval from the DOJ was anticipated as the Trump administration had not opposed any mergers, opting for settlements or unconditional approvals instead. Although the association between Larry Ellison and Trump has garnered attention, it did not influence the agency's public statements.

      However, the deal is not finalized yet. State attorneys general, particularly from California, are getting ready to challenge the merger on antitrust grounds. Their concerns include potential negative impacts on competition for creative talent, job reductions, increased production expenses, and diminished options for viewers. Various Hollywood actors, directors, producers, and writers have also voiced their opposition to the merger.

      The DOJ dismissed claims that the merger would restrict opportunities for writers and content creators, stating that “Demand for creative workers and labor is correlated with the Parties’ incentives to maintain or expand output.” Essentially, a larger combined entity would generate more content, not less.

      Paramount has been preparing for the transition, aligning the technology platforms behind Paramount+, Pluto TV, and BET+ onto a unified backend, creating a blueprint for integrating HBO Max post-acquisition. This technological integration is a significant operational aspect of the merger, even if it is receiving less focus than the antitrust discussions.

      If Paramount fails to finalize the deal by October, it will incur a daily penalty of nearly $6.9 million to its shareholders. While state lawsuits may delay the process, analysts believe Paramount has a better chance of obtaining government approval than Netflix would have under the current administration, which is more lenient regarding mergers.

      “This deal is pro-competitive, leading to a more robust company that is better equipped to compete with dominant tech platforms,” stated Paramount. The question remains whether merging two traditional media companies will truly create a legitimate competitor to Netflix and Amazon or simply postpone the inevitable decline of conventional Hollywood, a risk that David Ellison is taking with a $110 billion investment.