Donald Trump’s Department of Justice has decided to approve the $111bn merger of Paramount Skydance, controlled by the Ellison family, and Warner Bros Discovery, the parent company of networks like CNN and HBO.
The deal was approved by the justice department’s anti-trust division after months of review, and despite the concerns of many people in the entertainment and media industries who believe it will hurt competition by reducing the number of film studios and – most likely – merging two news networks, Paramount’s CBS News and CNN.
“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, including with respect to: (1) streaming video on demand (“SVOD”); (2) linear television; and (3) studio development, production, or distribution of films for theatrical release,” the agency said on Friday evening.
While the US government’s approval is a major win for the deal, hurdles remain. Earlier this week, the UK competition watchdog opened an investigation into the merger to determine whether it will result in a “substantial lessening of competition” in the UK. The Competition and Markets Authority (CMA) set a 7 August deadline to determine whether the merger requires a more in-depth review. In addition to reviewing the deal, European regulators are investigating the funding behind the merger; three sovereign-wealth funds in the Gulf have committed a combined $24bn. Both reviews have July deadlines.
Paramount denied the lessening of competition in its statement Friday evening: “We are grateful for the Department of Justice’s thorough review of this transaction, as well as the work of the other agencies that have completed their reviews and provided clearance to date. This deal is pro-competitive, resulting in a stronger company better positioned to compete against dominant technology platforms in an industry increasingly defined by intense competition for audiences, talent, technology, and investment. We remain focused on completing the transaction as soon as possible and delivering its benefits to consumers, creators, and the entertainment industry as a whole.”
On Tuesday, regulators in Australia approved the deal, after determining that it “is unlikely to have the effect of substantially lessening competition in relation to the wholesale supply of films for theatrical release in Australia”, according to a filing with the Securities and Exchange Commission that listed numerous other countries that have blessed the merger.
Journalists at CBS News and CNN have expressed concerns about the possibility of the networks being merged, which would probably entail significant job cuts, as the companies have promised $6bn in synergies from the deal. There is also long-held concern from some staffers at CNN about the possibility of David Ellison and his father Larry, a longtime Trump associate, reorienting the network in an editorial direction more favorable to the president. (David Ellison pledged in March that CNN’s editorial independence would be protected, but there is speculation that he could choose to put CBS News’s embattled editor-in-chief, Bari Weiss, in charge of the cable network.)
There is also still a possibility of a coalition of US state attorneys general filing a lawsuit to try to block the merger, something that could reportedly happen in the next few weeks and would probably be led by the California attorney general, Rob Bonta.
Bonta, on Friday evening, posted on social media, “The merger of Warner Bros and Paramount is not a done deal and remains under investigation by my office.”
Politico first reported that Trump’s justice department had decided to approve the merger.
“Over the course of a rigorous eight-month investigation led by the Division’s career staff, the Division received from the Parties over two million documents from over 80 custodians, substantial productions of data, as well as extensive documents, data, and advocacy from third parties across the media and entertainment ecosystem,” the justice department said.
Opponents of the deal criticized news of the Trump administration’s decision to approve the merger, which had long been expected.
“Despite all the talk about conducting a thorough investigation, the fix was in at the Trump Justice Department from the start,” Craig Aaron, co-chief executive of Free Press, said in a statement. “Paramount Skydance has fêted, flattered and promised sweeping changes to news coverage to win the administration’s approval, despite evidence that giving one corporation this much media power – all the movie studios, cable channels and newsrooms – will undermine competition, destroy jobs, slant the news and endanger our democracy.”
Aaron also called for state attorneys general to step up and file suit to try to stop the merger, saying: “The attorney generals have the evidence they need to stop this deal; now the public needs them to take action.”
The Democrat senator Elizabeth Warren, a vocal opponent of the deal, said in a social media post on Friday that the approval “is terrible news for every American who doesn’t want Trump-aligned billionaires to control what they watch and how much they pay”, adding that the merger “has reeked of corruption and influence-peddling”.
