Paramount Skydance won a boardroom battle for control of Warner Bros. Discovery this week. Now it must convince government officials globally that the $111 billion deal should close.
The deal could have an easy time in Washington. The Paramount chief executive, David Ellison, and his father and backer, the billionaire Larry Ellison, have allied themselves with President Trump. Democratic critics of the deal in Congress have little power to stop it from going through.
But state attorneys general have pledged to take a hard look at the deal, which will also most likely require approval from European regulators.
The Ellisons plan to combine Paramount’s movie studio with Warner Bros., which has made films like “Superman,” “A Minecraft Movie” and “Sinners.” The combined company would own two streaming services — Paramount+ and HBO Max — and two prominent sources of television news.
The combination of two of the five major movie studios has created concerns that the deal could reduce the number of potential buyers for scripts and potential employers for actors and crew members, driving down wages and the prices paid for creative material. The Justice Department blocked a publishing deal in 2022 over similar claims that the deal would reduce compensation for potential best sellers.
“I don’t think they’re out of the woods,” said Bill Baer, a former top antitrust official at the Department of Justice.
The shared ownership of CBS and CNN could also raise concerns over consolidation in news media, but that might be less relevant to federal regulators given the Ellisons’ alignment with Mr. Trump, Mr. Baer said.
The Ellisons won out last week in a heated battle to acquire Warner Bros. over Netflix, which had reached a deal to buy the company in December. The father and son started a hostile bidding war, eventually winning over Warner Bros. with a “superior” bid.
Larry Ellison personally lobbied Mr. Trump in favor of his son’s bid. David Ellison, who hired an antitrust official from Mr. Trump’s first term as his top lawyer, has become a presence in Washington. At the State of the Union on Tuesday night, he attended as a guest of Senator Lindsey Graham, Republican of South Carolina.
Paramount maintains the deal is legal. “We are confident that this transaction is indeed pro-competitive and look forward to continued constructive engagement with regulators around the world, including state attorneys general,” the company said in a statement.
Warner Bros. shareholders still need to vote on whether to approve the transaction. Paramount says it expects that vote will happen in the early spring. David Zaslav, the chief executive of Warner Bros., said on Friday that the deal could take up to 18 months to close.
Much of that time would be for clearing regulatory hurdles around the world. It was unclear if David Ellison or other executives involved in the deal would be called to testify before a Republican-controlled Congress. Netflix’s chief executive, Ted Sarandos, was called to testify before Congress earlier this year as the streaming giant mounted a vigorous Washington lobbying campaign in support of its own deal for Warner Bros.
In one possible positive for Paramount, the Justice Department had previously asked for additional information on the details of its hostile bid but did not challenge the proposed deal. Last month, Paramount said that meant there was no longer any legal reason it could not close the deal in the United States.
But that decision came before Paramount won out over Netflix. The agency still has wide leeway to continue to investigate the deal — and potentially challenge it — until the transaction formally closes.
The Writers Guild of America on Friday condemned the deal, which it said combined two of the largest employers of screenwriters, as damaging to competition. The Justice Department had successfully blocked Penguin Random House’s purchase of Simon & Schuster in 2022 over similar concerns that the combined company would reduce compensation for the authors of potential best-selling titles.
Others in Hollywood have been more supportive. Over the weekend, some major producers praised David Ellison’s support for the traditional business of making movies and releasing them in theaters. Some in Hollywood feared that Netflix would imperil that business if it were allowed to buy Warner Bros.
The deal is already facing scrutiny from state attorneys general, who can sue to block mergers under federal law.
“These two Hollywood titans have not cleared regulatory scrutiny — the California Department of Justice has an open investigation, and we intend to be vigorous in our review,” the state’s attorney general, Rob Bonta, a Democrat, posted on social media on Thursday.
Warner Bros. also has an international footprint. HBO Max is offered in Britain and some European countries. CNN has an international network.
That means regulators outside the United States could try to block the deal. They could also extract concessions from Paramount, like spinning off assets, to allow the deal to go through.
A spokeswoman for the Competition and Markets Authority, which reviews mergers in Britain, said the agency could not speculate on what matters it would investigate. A spokesman for the European Commission, which holds the same role for the European Union, said the companies had not formally notified authorities of the deal, an early step in its merger review process.
The U.S. Congress has the power to question executives and raise concerns about the transaction, but it cannot block a deal outright. That has not stopped Democrats in Congress from raising sharp criticisms of the deal.
The merger “must be subject to the highest levels of scrutiny,” said Senator Adam Schiff of California in a statement.
Senator Chris Murphy of Connecticut posted on social media that “when Democrats win back power we are going to break up these anti-democratic information conglomerates.”
David McCabe is a Times reporter who covers the complex legal and policy issues created by the digital economy and new technologies.
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