(Bloomberg) — Paramount Skydance Corp. said it has “no statutory impediment” in the US to closing its proposed $77.9 billion acquisition of Warner Bros. Discovery Inc. after clearing a US antitrust hurdle.
Paramount said Friday it has complied with the US Justice Department’s second-request review process under the Hart-Scott-Rodino Act and that a 10-day waiting period expired on Thursday.
The expiration of a waiting period doesn’t tacitly imply that regulators are on board with a deal. The department in the past has sued to block mergers after the waiting period passed.
Warner Bros. already has a signed an agreement to sell its studio and streaming business to Netflix Inc. for $72 billion. Earlier this week, Warner Bros. committed to re-engage with Paramount after it submitted a revised hostile bid and indicated it would be willing to raise its offer by $1 a share to $31. Warner Bros. has given Paramount a deadline of Feb. 23 to submit its “best and final” offer.
“Paramount Skydance continues to mislead stockholders and distract from the facts,” Netflix Chief Legal Officer David Hyman said in a statement on Friday. “The facts are that routine HSR milestones do not signal DOJ approval nor that any decision has been made. They have not secured approvals needed to close and they are a long way from doing so.”
In a securities filing on Friday, Paramount acknowledged that completing any transaction is subject to “certain other conditions,” including signing a definitive merger agreement with Warner Bros., shareholder approval and regulatory clearance in other jurisdictions. Paramount said it has also secured clearance from the foreign investment authorities in Germany, a step Netflix said it has also cleared.
The Justice Department could still sue to block a transaction by Paramount later and it has done so in other deals. Netflix and Paramount will both face significant scrutiny not only in the US but also the European Union.
California Attorney General Rob Bonta said on Friday that his office was taking a close look at the proposed purchase of Warner Bros. by either company.
“Further consolidation in markets that are central to American economic life does not serve our economy, consumers, or competition well,” Bonta said.
David Ellison, chief executive officer of Paramount, and Ted Sarandos, co-CEO of Netflix, have each argued that their deal will pass regulatory clearance. The two executives have been jockeying to win the favor of US President Donald Trump. Ellison’s father, tech billionaire Larry Ellison, is personally backing Paramount’s bid and is friendly with the president. Sarandos has also discussed Netflix’s bid personally with Trump, saying he is mostly concerned about the impact of any deal on jobs in the US.
A marriage of Warner Bros. and Netflix poses its own set of regulatory issues, most significantly the impact of combining Netflix with HBO Max, both among the top streaming platforms in the world. Netflix also argues that a Paramount-Warner Bros. tie-up would consolidate two of the five largest Hollywood studios and their distribution businesses, as well as the competing news divisions of CNN and CBS.
Demonstrating it has an advantage with regulators is a key part of Paramount’s strategy to thwart Netflix’s rival bid. Paramount is touting he waiting period expiration to try to suggest the deal has received a green light and convince Warner Bros. shareholders to vote against the Netflix transaction. Warner Bros. has scheduled a shareholder vote on the Netflix deal for March 20.
The Justice Department is conducting in-depth reviews of both the Netflix and Paramount offers, Bloomberg News previously reported. Key constituencies in Hollywood, including talent agencies, have recently received information requests from federal officials, and the Justice Department has summoned some of the country’s largest theater chains to private conversations about the potential impact of a sale of Warner Bros. Both deals have faced wide-ranging criticism from Hollywood and Washington.
Sarandos appeared in front of a Senate panel earlier this month to address lawmakers’ concerns about the impact on consumer choice in streaming and jobs in California.
Mike Lee, the Utah Republican who chaired the meeting, said the Netflix deal raises “numerous antitrust concerns,” noting Netflix and Warner Bros. compete to offer streaming content and for labor.
On Friday, Lee followed up by submitting a list of questions to both companies.
Democratic lawmakers, meanwhile, also have questions for Ellison and questioned Paramount’s confidence that it will secure necessary clearance quickly and that its bid doesn’t raise competition concerns.
“We can assure you that it raises significant competition concerns that the Senate has not had an opportunity to examine,” a group of including Cory Booker, Chuck Schumer and Elizabeth Warren, wrote in a letter to Ellison on Thursday. The lawmakers instructed Paramount to preserve all documents and records pertaining to its proposal, including communications with Trump and his entourage and any Justice Department officials.
–With assistance from Josh Sisco.
(Updates with California attorney general comments in the eighth paragraph.)
