The merger is still under investigation in California as well as internationally due to antitrust concerns.
Paramount Skydance’s $111 billion acquisition of Warner Bros. Discovery has been approved by the Justice Department’s Antitrust Division, in the latest update to the merger saga, as first reported by Politico on Friday.
The deal was agreed upon by the two studios in February, and includes not only Warner Bros.’ catalog and studio lot but news network CNN and streaming service HBO Max. The latter will be combined with Paramount+ to create one streaming service with 200 million subscribers total, according to Politico.
The merger is going to be transformative not only for the two studios, as many predict layoffs will follow, but for the entertainment industry as a whole. Consolidating the two rival studios leaves only four major studios total, spurring an investigation into whether the merger would violate antitrust laws.
Now, the investigation has come to a close, as the DOJ has determined that “the transaction is not likely to result in harm to competition or American consumers, including with respect to: streaming video on demand, linear television and studio development, production or distribution of films for theatrical release,” according to a statement from the DOJ on Friday.
A spokesperson for Paramount said in a statement in response to the decision that the merger would create “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,” according to Politico.
Though the DOJ has approved the merger, the California Department of Justice could still sue to try to stop it. According to Politico, a spokesperson for Attorney General Rob Bonta’s office said that the merger remains under investigation by the California DOJ.
U.S. Sen. Elizabeth Warren (D-Mass.) said in a statement on Friday that “the Justice Department’s approval was terrible news for every American who doesn’t want Trump-aligned billionaires to control what they watch and how much they pay.”
“State AGs must block this merger,” Warren said.
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Last month, in a letter to Bonta urging no further investigation, Paramount Chief Legal Officer Makan Delrahim argued the deal would allow for competition with Netflix, according to Politico. Netflix had previously been engaged in a bidding war with Paramount over the acquisition of Warner Bros.
In addition to the California DOJ, the European Union’s Foreign Subsidies Regulation is investigating approximately $24 billion from Saudi Arabia, Qatar and Abu Dhabi being used to fund the deal, according to Variety. On Tuesday, the United Kingdom’s Competition and Markets Authority also launched an investigation into the deal, according to Deadline.
Ellison has said the mega studio intends to produce at least 30 films annually, keeping up with the amount typically released each year by both Warner Bros. and Paramount. But critics of the merger are skeptical that will be the case, especially as Paramount Chief Operating Officer Andy Gordon said in March the company expects to save $6 billion within three years of closing the deal, according to Politico.
Though this stoked fear of layoffs, Gordon said most of the savings would not be due to reduced labor costs, according to Politico.
More than 5,500 Hollywood workers have signed an open letter speaking out against the merger. Some actors who have signed the letter include: Florence Pugh, Pedro Pascal, Joaquin Phoenix, Ben Stiller, Kristen Stewart, Mark Ruffalo, Rosario Dawson, Rosie O’Donnell and Robert De Niro.
They argue the merger would reduce competition and jobs in the industry, saying, “Our industry is already under severe strain, in large part due to prior waves of consolidation. We have witnessed a steep decline in the number of films produced and released, alongside a narrowing of the kinds of stories that are financed and distributed.”
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