Aniket PujariParamount Skydance Corp. is pressing to complete a Justice Department antitrust review of its tender offer for Warner Bros. Discovery Inc. shares within the next few weeks, according to a Bloomberg report citing people familiar with the matter.
The entertainment and media giant has been providing information requested by the government, the people told the news portal. Finishing this task will require a 10-day waiting period during which the Justice Department will decide whether to challenge Paramount’s proposal due to competition concerns.
Securing an early approval from regulators is a crucial part of Paramount’s plan to prevent Netflix Inc.’s planned acquisition of Warner Bros.’ studios and streaming businesses. If Paramount can demonstrate it has cleared a significant regulatory obstacle, it will then attempt to persuade Warner Bros. shareholders to vote against the Netflix deal.
In December, Warner Bros. agreed to sell its studios and streaming divisions to Netflix for $82.7 billion, opting for this over a competing bid from Paramount. Warner Bros. intends to seek shareholder approval for the deal by April. Meanwhile, Paramount has been attempting to bypass the deal by appealing directly to shareholders and lobbying regulators.
The Justice Department might sue to block Netflix, increasing Paramount’s chances of winning Warner Bros. without needing to raise its $30-a-share all-cash bid. A spokesperson for Netflix told the news portal that the company expects Paramount will “self-declare” it is in compliance with federal regulators. “We remain focused on the value Netflix and Warner Bros. can create together,” the spokesperson was quoted as saying.
Livemint could not independently verify the report.
The Justice Department is thoroughly examining the offers from Netflix and Paramount, Bloomberg earlier reported. Federal officials have sent information requests to major Hollywood constituencies, including talent agencies, people with knowledge of the outreach told the news portal.
What would DOJ approval mean?
A Justice Department approval wouldn’t guarantee that Paramount is in the clear. If Paramount were to alter key terms such as price or eventually sign a merger agreement with Warner Bros., its proposal would probably need to be resubmitted for DOJ review. Warner Bros. shareholders are expecting Paramount to raise its offer.
Paramount and Netflix are also subject to ongoing reviews in the EU and UK, along with scrutiny from state attorneys general in the US.
Paramount has so far resisted increasing its $108 billion bid for Warner Bros., asserting that its offer is better than Netflix’s and more likely to gain regulatory approval. Paramount CEO David Ellison said that combining Netflix, HBO, and Warner Bros. would create the largest paid streaming company in the world. The Netflix deal has received criticism, including bipartisan opposition during a Senate hearing on February 3.
Warner Bros. and Netflix expressed confidence in their ability to secure approval for their deal and claimed that the Paramount deal would be more damaging to Hollywood. However, they recognise that the Justice Department’s review is expected to continue into later this year.
