The U.S. Department of Justice gave federal clearance Thursday to the proposed merger between Paramount Skydance and Warner Bros. Discovery, removing a major regulatory hurdle from a deal valued at roughly $110 billion. The approval marks a significant step forward, though the transaction still faces scrutiny at the state level.
According to CNBC, the DOJ said in its determination that the merger is not likely to harm competition or consumers. "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," the department said.
Paramount responded to the clearance with a statement welcoming the decision and pressing the case for the deal. "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," a company spokesperson said. "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."
Paramount's stock rose about 3% in after-hours trading following the announcement. The deal has already received approval from WBD shareholders, as well as clearance from the Australian Competition and Consumer Commission earlier this week.
Still, the path to closing is not fully clear. California Attorney General Rob Bonta has been among the officials examining the proposal, and his office confirmed Friday that the deal remains under investigation by the California Department of Justice. That review could produce a legal challenge even after federal approval.
Paramount CEO David Ellison told investors during the company's April earnings call that the deal was on track to close by September. A so-called ticking fee kicks in after that date, making the transaction more expensive the longer it drags on.
European regulators are also still working through their review. The European Union's regulatory arm began examining the deal earlier this week and has set a July 14 deadline for completing that assessment.
The proposed deal, announced in late February, calls for Paramount to pay $31 per share to acquire all of WBD's assets. Those assets include cable networks CNN and TBS, the Warner Bros. film studio, and the HBO Max streaming platform. The proposal replaced an earlier arrangement under which Netflix had been in line to acquire WBD's streaming and film holdings.
The combined company would face a crowded and competitive media landscape dominated by major technology platforms with far greater financial resources. Paramount has pointed to that competitive reality as one of the reasons the merger makes sense. Whether state and European regulators agree will determine how quickly the deal can close.
