The department said the merger was unlikely to hurt competition in the media industry
The US justice department has approved Paramount’s proposed acquisition of Warner Bros. Discovery on the grounds that it is unlikely to hurt competition in the media industry or consumers, reported The Associated Press.
The department announced that it had concluded its investigation into the landmark merger on Friday June 12. It ruled that the combination would “increase competition across the media and entertainment ecosystem, with benefits for American consumers and workers,” per a statement published by AP News.
Regulators reportedly considered the merger’s potential effect on video streaming and determined that it would provide a strong competitive alternative to other video streaming platforms. It noted that social media platforms showcasing video streaming content, such as YouTube and TikTok, “do not appear to be competitive substitutes here under well-established antitrust legal precedents, although they compete broadly for consumer attention,” per a statement published by AP News.
Regulators also indicated that given the robust competitive market for live programming, the Paramount-WBD merger would not negatively affect the availability of alternatives in that area. Moreover, the combination was not expected to impact competition in studio development, production, or films’ distribution for theatrical release despite both Paramount and WBD being major operators of film studios in Hollywood.
“Instead, evidence shows extensive competition within the industry, which has generated greater output and diversity of film offerings, and is likely to continue unabated,” regulators said in a statement published by AP News.
Paramount Skydance chief executive David Ellison had stated his intent to keep Paramount and Warner Bros. separate as film studios. Nonetheless, Paramount indicated that that duplication would result in considerable cuts.
Other regulators in the US and overseas continue to assess the merger, with the European Commission setting July 7 as a possible deadline. The UK Competition and Markets Authority is set to make an initial judgment by early August.
The merger was expected to close in the third quarter of the year, with Paramount promising shareholders a 25-cent per share “ticking fee” for each passing quarter if the deal is not completed by September 30. Paramount also agreed to a US$7 billion regulatory termination fee.
Latham & Watkins; Cravath, Swaine & Moore LLP; Wachtell, Lipton, Rosen & Katz; and Debevoise & Plimpton LLP were the firms that worked on the landmark deal. Latham and Watkins recently acted for Paramount in Warner Bros. consent solicitations with respect to outstanding notes worth about US$15 billion.
