Paramount’s acquisition of Warner Bros. cleared a major hurdle Friday afternoon. Antitrust Division of the US Department of Justice issued a statement Saying it had completed its review of the deal and would not challenge the merger.
The statement said, “The legacy of these transactions reflects the challenges that arise when the commercial rationale for a deal lacks clear alignment with the competitive incentives of the acquiring firm or the competitive evolution of the market. In technology-driven industries, the disruptors of the recent past can quickly become the entrenched monopolists of the present day.” “It is with this historical experience and current enforcement sensitivity to the competitiveness of dynamic markets that the Division conducted a thorough investigation of the proposed transaction to assess whether the proposed transaction would cause any harm to competition.”
The statement further said that not only did the investigation conclude that the merger, which would bring together Hollywood’s two largest legacy studios, would not create a monopoly – but it also predicted that the outcome would be an improvement on existing conditions.
“The extensive investigative record reviewed by the Division shows that the impact of the transaction will be to enhance competition in the media and entertainment ecosystem with benefits for American consumers and workers,” the statement said.
The lengthy statement cites a review of three major categories – streaming, linear television and theatrical films – for potential anti-competitive behavior if the deal closes. In all three categories the department concluded that there was no cause for concern.
On the streaming side, the statement noted that consumers will benefit from a stronger alternative to Netflix that will likely be created by the combination of HBO Max and Paramount+.
“Following Netflix’s leading role in the emergence of SVOD nearly twenty years ago, big tech companies like Amazon, and later legacy media firms like Disney, entered and created SVOD platforms to compete and cater to changing consumer preferences for scripted content and digital distribution. By comparison, parties have historically entered SVOD late, as fewer customers subscribe to Paramount+ and Warner Bros.’ “The HBO Max and Discovery+ offerings rival those of today’s three largest streamers,” the statement said. “The evidence reviewed and carefully analyzed by the Division indicates that, following the merger, competition in SVOD is unlikely to be harmed. On the contrary, the combined firm is likely to suffer a loss increase Competing by providing consumers with more robust competitive alternatives to larger SVOD offerings.
The statement cited alternatives like YouTube and TikTok as other offerings that may not be controlled by Paramount following the consumer merger.
In the case of film, the report cites the recent success of independent films at the box office as evidence that the film market is competitive and not controlled by legacy studios.
“Recent box office successes since the transaction was announced show that a studio’s heritage does not determine whether it can be successful in development, production or distribution at the domestic box office today: for example, this includes, Amazon MGM (“Project Hail Mary”), A24 (“Backrooms”), Lionsgate (“Michael”), Blumhouse (“Obsession”),” the statement said. “These disruptive industry developments suggest a potential inflection point in the evolving competitive landscape for theatrical production and distribution, supporting parties’ incentives to generate and distribute content.”
Although the deal has not officially closed, the regulatory battle was seen as one of the last major hurdles to overcome after Paramount shareholders approved the deal in April.