Paramount claims merger has satisfied all regulators, would close “today” but for state AGs

Paramount Skydance Corporation has satisfied all regulatory clearances required under the merger agreement to close its proposed acquisition of Warner Bros. Discovery, Inc.

The eight-month review process has spanned 68 countries worldwide, including the European Union, UK, Australia, Canada, Brazil, China, COMESA, the U.S. Department of Justice and, most recently, Mexico, which announced its clearance today. These independent regulators from across the globe applied the law and market definitions that reflect how audiences consume entertainment and how media companies compete today – and have consistently found no basis to prevent the transaction from moving forward. Paramount and WBD could and would close today and begin delivering the benefits recognized by regulators around the world, theater owners and others across the industry but for the actions of just 12 state attorneys general.

“We are grateful that competition authorities in nearly 70 jurisdictions worldwide have independently and thoroughly reviewed this transaction and reached the same conclusion: it is pro-competitive, pro-consumer and pro-worker,” said David Ellison, CEO of Paramount. “Despite this overwhelming global consensus, the litigation brought by the State of California and 11 other State AGs remains the final obstacle to completing a combination that will create a stronger competitor with greater capacity to invest in premium content, support creative talent and workers, and deliver more high-quality entertainment to audiences.”

Paramount urges these 12 State AGs to engage with us in good faith, as we have repeatedly sought to do, to resolve this litigation and clear the way to bring these two companies together.

“While we remain confident that the law and the facts are on our side, we have offered commitments and concessions and remain open to working constructively with the State AGs to find a path forward in the interest of our employees and the creative community in California and across the world – just as we have with the regulators in 68 countries worldwide,” said Ellison.

Rather than support a stronger Hollywood and deliver tangible commitments to invest in for the benefit of labor, talent and other industry participants, the current path the 12 State AGs are on inflicts harm without benefit to their own constituents. The unwarranted eight-plus month additional delay for a trial beyond the engagement of the last 9 months will impose needless costs from penalty fees, litigation expenses and business disruption. As a business with many stakeholders, including pension and state retirement funds, Paramount is required to consider how it can absorb the unnecessary additional financial costs while preserving the longer-term strength of the combined company. The better path would be to resolve this through a settlement that would serve the interests of workers, consumers and the consumers in each of the 12 states.

Across jurisdictions, antitrust regulators examining the same competitive dynamics have reached findings that directly contradict the states AGs’ core theories about competition in theatrical film distribution, the range of studios competing in film production, and the competitive pressure facing linear television. What regulators have found:

Competition Overall

THEME: The unanimous clearance of the transaction by competition authorities around the world confirms that the combination of Paramount and WBD does not pose a threat to competition.

• UK Competition and Markets Authority (CMA): The transaction “does not give rise to a realistic prospect of a substantial lessening of competition.”

Cable Networks

THEME: As the European Commission, U.S. Department of Justice and others have recognized, the relevant competitive landscape today is not cable-vs-cable, as the 12 State AGs contend, but cable competing directly with streaming and other platforms for audiences.

• European Commission: “Streaming platforms offering children’s content will continue to act as a competitive constraint on the merged entity’s TV channels” – rejecting a cable-only competitive landscape.

• U.S. DOJ: Streaming services “compete aggressively” and place “increasing competitive pressure on legacy linear and broadcast networks.”

Theatrical Film Distribution

THEME: Regulators worldwide recognize theatrical film as a broad, dynamic and hit-driven market in which films compete based on their ability to attract audiences – not whether they fall within an artificially narrow “top-grossing” category.

• Australian Competition and Consumer Commission (ACCC): The transaction is “unlikely to have the effect of substantially lessening competition,” with the merged company “constrained by other film studios,” including Disney, Sony, Universal, Amazon MGM, StudioCanal, and numerous independent providers.

• Brazil’s CADE: Treated film distribution as “a single relevant market, without additional segmentation” – unlike the 12 State AGs’ narrower “top-grossing” theatrical market.

• COMESA – Eastern & Southern Africa: Described the theatrical film market as “highly competitive, dynamic, and hit-driven,” citing the “presence of numerous competitors.”

Film Output & Quality

THEME: Regulators found no basis for claims that the transaction will reduce film output or quality – a conclusion further reinforced by Paramount’s commitment to release at least 30 highquality films annually across the combined company.

• Contrary to the 12 State AGs’ claim of “higher prices, lower quality, and less content,” the ACCC found the merged company “would still be incentivised to produce and supply a similar number of films, and films of similar quality.”

Across markets and continents, independent competition authorities scrutinized every major facet of the transaction – including theatrical distribution, film production, streaming and content licensing – and consistently found robust competition, directly contradicting the artificially narrow market definitions relied on by the state attorneys general.

The judgment of 68 jurisdictions cannot simply be dismissed. Their conclusion is clear: this transaction is lawful, pro-competitive and raises no antitrust concerns. The lawsuit brought by just 12 of 50 State AGs stands alone – contrary to the global regulatory consensus, the facts, the law and sound economic analysis. While we are prepared to make our case at trial, the delay occasioned by this lawsuit is inflicting harm not merely on the two companies involved, but on the broader industry and, ultimately, the very constituents these 12 State AGs represent.