Paramount Warner Bros. antitrust review could be left to states

One of the most important mergers in Hollywood history may have passed federal antitrust review a week before it was announced.

February 20th, top declare That’s the deal warner bros Discovery passed a statutory waiting period that would have allowed the Justice Department to preemptively block the merger. Paramount’s Chief Legal Officer Makan Delrahim was working to expedite the process if Netflix’s offer fell through, which happened on Thursday.

“Trying to complete a merger review with the federal government before a deal has even closed is unusual and incredibly creative and clever,” said Lee Hepner, senior counsel at the American Economic Liberties Project. “He really shortened the time frame in which a merger could be challenged after it was approved.”

Although the Justice Department could still seek intervention, as a practical matter the process may now be in the hands of state attorneys general. California Attorney General Rob Bonta promise It warned on Thursday that the deal was “not a done deal” following a “robust” investigation.

State AGs have fewer resources than the Department of Justice to pursue high-profile cases, but they may be able to band together to block the deal.

“It’s very common for attorneys general to form coalitions willing to bring these cases,” said Spencer Weber Waller, an antitrust professor at Loyola University Chicago. “States are getting good at this. They’ve built a very consistent record of dealing against traditional antitrust theories.”

Netflix announced that Warner Bros. The deal to acquire Discovery raised antitrust alarms due to its dominant position in streaming. Paramount is a major provider of movies and TV shows, although it doesn’t have nearly the same size in the streaming market. The integration with Warner Bros. Discovery could raise concerns about creators having fewer venues to sell and theaters having fewer movies to show.

“I think there was less backlash or concern about the Paramount acquisition than there was with Netflix,” said Jennifer Dixton, a former deputy director of the Justice Department’s antitrust division who now teaches at UCLA. “There may still be some hurdles Paramount has to jump through before a deal can happen. I’m not sure it’s completely clear.”

Warner Bros. CEO David Zaslav told employees Friday that the deal will likely take six to 12 months to close. The deal will face scrutiny in Britain and the European Union. However, those jurisdictions are more likely to impose conditions rather than block it outright.

In 2019, a coalition of state attorneys general tried to block the merger of T-Mobile and Sprint. These efforts culminated in an agreement that allowed the deal to proceed while providing certain protections for consumers and employees. Several states have teamed up with the Federal Trade Commission to block the 2024 merger of Kroger and Albertsons.

Paramount and Warner Bros. Discovery could end without federal aid if the state pursues a similar course. Matt Stoller, research director at the American Economic Liberties Project, argued that while that may have been a major obstacle before, it is less so now.

“I don’t have a lot of trust in the federal government,” he said. “This is clearly corrupt. It’s ridiculous. At least if the federal government allows it to shut down really quickly, it means there’s a solution.”