Paramount-Warner Bros. merger creeps forward as US regulators approve

US Department of Justice clears $111B buyout

Paramount's acquisition of Warner Bros. is closer than ever to happening. The Antitrust Division of the U.S. Department of Justice announced Friday it had closed its investigation into the merger and won't contest Paramount's $111 billion buyout of Warner Bros., clearing a major regulatory hurdle for the controversial entertainment deal.

That decision paves the way for Paramount Skydance to combine with Warner Bros. Discovery, bringing CNN, CBS News, HBO, Paramount Plus, and a wide swath of TV networks and intellectual properties under the same corporate umbrella. The merger has been opposed by many creators — more than 5,000 of them — and labor unions, who fear it could lead to decreased competition, reduced consumer choice, and mass layoffs in the film and television industry.

"The Division has completed its analysis of the proposed merger of Paramount and Warner Bros. and determined based on the evidence received in its investigation that the transaction is not likely to result in harm to competition or American consumers," Department officials said in a statement. Furthermore, the Antitrust Division argues that, as it relates to streaming video on demand, the combination of Paramount Plus and HBO Max "is likely to increase competition by offering consumers a more robust competitive alternative to the larger SVOD offerings."

As it relates to the production of theatrically released movies, the Division argues that the merger "is not likely to harm competition in studio development, production, or distribution of films for theatrical release." The DOJ uses movies like Backrooms, Obsession, and the upcoming Elden Ring adaptation as evidence to support its argument.

"Non-legacy studios have been successful in developing, producing, and distributing films with significant budgets above $100 million, with additional large budget films soon to be offered in theaters by studios including Lionsgate (Hunger Games), Netflix (Narnia), A24 (Elden Ring), and others," the Division said. "Moreover, recent box office successes since the announcement of the transaction show that a studio’s legacy does not determine whether it can succeed at developing, producing, or distributing in the domestic box office today: including, for example, Amazon MGM (Project Hail Mary), A24 (Backrooms), Lionsgate (Michael), Blumhouse (Obsession). These disruptive industry developments suggest a potential inflection point in the evolving competitive landscape for theatrical production and distribution, supporting the Parties’ incentive to continue to generate and distribute content."

The Division's statement does not address Paramount and Warner Bros.' respective games businesses. Should the merger go through, the recently announced Paramount Game Studios would theoretically absorb Warner Bros. Games and studios like Avalanche Software, NetherRealm Studios, Rocksteady Studios, and TT Games.

While the Justice Department has cleared the way, Paramount still faces potential legal challenges from several U.S. states. In February, California Attorney General Rob Bonta said the state was "taking a very close look" at the buyout of Warner Bros. Bonta could still sue to block the deal.

"Further consolidation in markets that are central to American economic life does not serve our economy, consumers, or competition well. In fact, consolidation of markets has led to increased unaffordability, a loss of good-paying job opportunities, and fewer choices for consumers,” Bonta said in a statement. “The film and entertainment industry in California not only has historical importance to our state, it also is a critical sector that buoys the state's economy of California and touches the lives of Americans daily. The proposed Warner Brothers transactions must receive a full and robust review, and California is taking a very close look. We are committed to fighting market consolidation that we find unlawful."

Massachusetts senator Elizabeth Warren said in April, after Warner Bros. shareholders voted on the buyout, "The Paramount-Warner Bros. merger isn't a done deal. State attorneys general across the country are stepping up to stop this antitrust disaster."

After the Justice Department signed off on the deal on Friday, Warren called the decision "terrible news."