Paramount building in Los Angeles, United States. frank peters - stock.adobe.com

In October, US media conglomerate Paramount completed its $110bn acquisition of Warner Bros Discovery after settling an antitrust challenge brought by 12 states and agreeing to conditions on the combined company. Some experts have questioned whether the deal received proper competition scrutiny, amid concerns about the Trump administration’s role. Meanwhile, the settlement terms may reflect a wider shift in how competition authorities approach mergers.

‘There is a broader debate occurring worldwide regarding the fostering of an environment which supports a less interventionist approach by antitrust authorities,’ says Peter Alexiadis, Editor of the IBA journal Business Law International. ‘Part of that approach involves the exploration of whether effective behavioural remedies can be crafted, rather than insisting on structural remedies.’

The combined company, renamed Skydance, brings together two major film studios, premier television assets, a pair of significant news networks – CBS News and CNN – live sports and a collection of well-known media brands and franchises, according to a company statement. Its two streaming platforms, Paramount+ and HBO Max, have about 200 million subscribers between them.

Jeffrey Kessler, a partner at Winston Taylor and Paramount’s lead outside counsel, argued the merger would be ‘pro-competitive’ in today’s new media streaming environment. The merger would ‘create a true competitor in streaming that could go toe-to-toe with Netflix or Disney or [Amazon] Prime,’ Kessler said in July.

US President Donald Trump had raised antitrust concerns about Netflix’s original $83bn bid for the HBO film and television studios of Warner Bros. Under that bid, CNN, Discovery and other cable properties would have been spun off into a separate company. President Trump warned that Netflix had a ‘very big market share’ and that the combination ‘could be a problem.’ In December, he said he would be ‘involved in that decision,’ referring to the merger’s approval. In February, Netflix’s co-CEO Ted Sarandos said that combining the two companies would create more American jobs and ‘give consumers more content for less,’ noting that 80 per cent of HBO Max subscribers pay for Netflix too.

Paramount’s rival bid was primarily backed by billionaire Larry Ellison, an ally of President Trump and the father of David Ellison, now Skydance’s co-CEO. Trump’s son-in-law, Jared Kushner, had initially backed Paramount’s takeover bid with financing, as did the sovereign wealth funds of Qatar, Saudi Arabia and the UAE. Kushner later withdrew.

‘I’ve been called by both sides,’ said President Trump in February, ‘but I’ve decided I shouldn’t be involved. The Justice Department will handle it.’ Later that month, just hours after Netflix’s Sarandos met senior officials at the US Department of Justice (DOJ), the company withdrew, saying that matching Paramount’s price was not ‘financially attractive’. A group of lawmakers demanded to know whether administration officials had used ‘closed-door meetings’ to discourage Netflix’s bid. Sarandos has denied there was political interference in the deal.

In April, David Ellison hosted a private dinner at the US Institute of Peace. President Trump attended, along with Acting Attorney General Todd Blanche and Brendan Carr, the Federal Communications Commission Chair. Seven weeks later, the DOJ cleared the merger, having spent eight months evaluating the possible impact. The DOJ directed Global Insight to a statement in which it said the transaction was ‘not likely to result in harm to competition or American consumers.’ Then-Acting Assistant Attorney General Omeed Assefi had previously denied that ‘politics’ would drive the DOJ’s review.

Diana Moss, Vice President and Director of Competition Policy at the Progressive Policy Institute, says that a government decision to forbear from ‘intervening in a problematic merger’ reflects ‘harmful politicisation of antitrust,’ here by ‘looking the other way.’

David Ellison acknowledged having a ‘good relationship’ with the Trump administration in a media briefing. He added that he maintains constructive relationships beyond the administration. ‘We want to speak to everybody,’ he said. ‘We do not want to politicize the company.’

Ellison has reportedly told CNN employees that he stands with the news outlet in its lawsuit to restore access to the White House. In September, President Trump attempted to ban journalists from CNN and two other outlets, citing concerns about their reporting and later ‘national security’. The news organisations sued on First Amendment grounds and a federal judge has issued a restraining order against the president.

With federal authorities standing aside, the states became the only enforcement backstop to the merger. In July, California Attorney General Rob Bonta filed a lawsuit to block it. He was joined by 11 other attorneys general, who warned that the combined company would hold a 27 per cent share of box office revenues and 34 per cent of cable viewership. The merger ‘would lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the US,’ Bonta said. In July, Paramount rejected these allegations in a statement.

In September, the states settled their lawsuit. In return, Skydance committed not to relocate its Hollywood film studios for five years and to produce at least 30 films and over 180 television programmes a year. It also agreed to establish an editorial oversight board for CNN and CBS News to guard against perceived political interference.

A US district judge approved the settlement. Critics, including a coalition of media advocacy groups, called the behavioural remedies unenforceable. Bonta said the settlement ‘resolves the antitrust concerns at the heart of our lawsuit.’ Meanwhile, President Trump praised the deal.

Andrew Lustigman, an officer of the IBA Intellectual Property and Entertainment Law Committee, says the merger leaves rights in franchises such as Harry Potter unchanged but narrows where content can be licensed and complicates future IP arrangements. ‘A streamer or broadcaster now has one fewer major studio to negotiate with,’ he says, meaning tougher renewals and more of the library pulled back onto the company’s own service as existing licences expire, for example. The effect will be felt most outside the US, where much of this content is licensed country by country, while writers and producers pitching new projects ‘have one fewer place to sell them,’ says Lustigman, a partner at of Olshan Frome Wolosky in New York.