US Justice Department Clears Skydance's Acquisition of Warner Bros. Discovery

The US Justice Department (DOJ) has cleared Paramount Skydance Corporation's planned acquisition of Warner Bros Discovery.

The approval clears a major regulatory hurdle for a deal that will reshape the American entertainment industry.

After an eight-month investigation, the DOJ concluded that the roughly $US110 billion ($156 billion) merger is unlikely to harm competition or American consumers.

Let's breakdown how we got here.

First, some background

You might be wondering where all this has come from; we've you you sorted.

David Ellison, the leader of Paramount Skydance, is the son of Larry Ellison, a major donor to US President Donald Trump.

He's been trying to buy Warner Bros Discovery since the end of last year, but only managed to reach a deal to acquire the studio in late February after a rival bid by Netflix ultimately fell short.

Executives at Paramount have argued the merger would be good for the broader industry and give consumers access to more content.

Why did the DOJ approve the deal?

The DOJ's anti-trust division reviewed more than 2 million documents, took testimony and examined the deal's possible effects across the entertainment industry.

It said the evidence did not show that the merger was likely to harm competition.

"The extensive investigatory record reviewed by the Division suggests that the impact of the transaction will be to increase competition across the media and entertainment ecosystem, with benefits for American consumers and workers," the department wrote in a statement.

The DOJ also found the deal was unlikely to harm the traditional television business, where there is vigorous competition for live sports, news and political commentary.

Assistant Attorney General Omeed Assefi said in the past that politics would "absolutely not" drive the DOJ's review of the transaction, given Mr Ellison's ties with the president.

Roadblocks still possible

Paramount, however, still faces other potential roadblocks to closing the deal.

States such as California are reviewing the sale and could sue to block it.

In February, California's Attorney-General Rob Bonta said he was concerned a merger would further limit competition in the entertainment industry.

"Consolidation of markets has led to increased unaffordability, a loss of good-paying job opportunities and fewer choices for consumers," Mr Bonta said.

In a post on X, Mr Bonta said the merger is "not a done deal" and "remains under investigation by my office".

More than 1,400 Hollywood actors, directors and filmmakers in April signed an open letter opposing the merger.

They believe combining the two historical rival studios could lead to mass lay-offs, among other concerns.

"The result will be fewer opportunities for creators, fewer jobs across the production ecosystem, higher costs and less choice for audiences in the United States and around the world," the signatories said.

Democrat senator Elizabeth Warren, a vocal opponent of the deal, said in a social media post the approval is "terrible news for every American who doesn't want Trump-aligned billionaires to control what they watch and how much they pay".

Beyond the US, European regulators are also looking into the deal.

The European Commission has listed July 7 as a tentative deadline for its review. And the UK's Competition and Markets Authority is aiming to make an initial decision about its probe by early August.

Why does Paramount want Warner Bros?

Paramount argues that combining the two studios together would enable them to compete with Netflix, Disney and technology companies that have expanded into entertainment, such as Amazon and Apple.

In documents filed to the Securities and Exchange Commission in January, Paramount said:

"Our priority is to build a vibrant, healthy business and industry — one that supports Hollywood and creatives, benefits consumers, encourages competition, and strengthens the overall job market."

Paramount Skydance currently owns Paramount Pictures, CBS and Paramount+.

By acquiring the Warner Bros Discovery, they will add Warner Bros Pictures, CNN, HBO and the HBO Max streaming service to their portfolio.

Mr Ellison has pledged in the past to keep the studios as standalone movie operations and vowed to release a combined 30 movies a year in theatres.

Paramount executives have said they anticipate achieving more than $US6 billion in cost savings through the merger.

A Paramount spokesperson said they were "grateful" for the DOJ's decision in a statement.

"This deal is pro-competitive, resulting in a stronger company better positioned to compete against dominant technology platforms in an industry increasingly defined by intense competition for audiences, talent, technology, and investment," the statement read.

The company said it is now focused on completing the deal as soon as possible.

Will HBO Max and Paramount+ combine?

We don't know yet.

It's possible there will be a bundling situation as with Disney+ and Hulu.

Combining the two studios would create a streaming service with approximately 200 million subscribers.