Mere hours before Paramount Skydance Corp. Chief Executive Officer David Ellison initiated an aggressive offer for Warner Bros. Discovery Inc., he socialized in Washington with several of the federal government's most influential figures.
TL;DR
- Skydance CEO David Ellison met with influential Washington figures before a $108 billion Warner Bros. Discovery offer.
- FCC Chair Brendan Carr and CBS CEO George Cheeks were present at the Kennedy Center Honors event.
- Paramount's deal faces antitrust scrutiny globally, potentially easier than Netflix's bid.
- President Trump expressed antitrust concerns about Netflix's potential Warner Bros. acquisition.
During the Kennedy Center Honors event on Sunday evening, Ellison engaged in conversation with President Donald Trump, as reported by individuals privy to the proceedings. Federal Communications Commission Chair Brendan Carr and his spouse were seated with Ellison in his designated area, adjacent to Paramount board member Justin Hamill and CBS CEO George Cheeks, according to these sources, who requested anonymity when discussing a private subject.
Should Paramount succeed with its unsolicited $108 billion offer for Warner Bros., it would not require sanction from the FCC or legislative bodies, yet the communication signifies a widespread effort in Washington to bolster backing for the transaction.
A potential alliance between Paramount and Warner Bros. Would still encounter a lengthy antitrust examination globally. Furthermore, it would probably encounter fewer obstacles than Netflix Inc., particularly from federal authorities in Washington, according to industry observers.
Should Paramount finalize its acquisition of Warner Bros., it's anticipated that the US Justice Department, along with state attorneys general and regulatory bodies in the European Union and other regions, will likely offer their opinions.
Paramount, the corporation overseeing CBS, MTV, and various other media ventures, has put forth a proposal to acquire the entirety of Warner Bros., encompassing its collection of television channels such as CNN, TNT, and the Discovery Channel. Such a merger would also unite their respective film and television production divisions.
“Paramount would likely have an easier and faster path to antitrust clearance than Netflix, in our view, not only because of more limited antitrust issues, but also due to the apparent backing of the administration,” said Bloomberg Intelligence antitrust analyst Jennifer Rie. The combined market shares of Paramount and Warner in the streaming market would be lower than in the Netflix deal, she said.
According to the analysts, this might not hold true for European reviews or those conducted by Democratic state attorneys general.
Paramount is managed by David Ellison, with financial backing from his father, Larry Ellison, who is the planet's second-wealthiest individual. The firm has emphasized their enduring, strong connections with President Donald Trump. Their purchase of Paramount, finalized in August, has garnered public commendation from Trump.
Antitrust Concerns
During Sunday's remarks, Trump voiced potential antitrust worries regarding Netflix's proposed $83 billion purchase of Warner Bros., pointing out that the market dominance of the merged company could present issues. Furthermore, Trump indicated his personal participation in the upcoming decision-making.
“We have to see the Netflix percentage of market, Paramount, the percentage of market,” Trump said, speaking to reporters at the White House Monday. “None of them are particularly great friends of mine. You know, just I want to, I want to do what’s right.”
The former president stated he had no discussions with his son-in-law, Jared Kushner, regarding his involvement in Paramount's unsolicited acquisition attempt via his firm Affinity Partners.
“If the market share on streaming is well above 30%, you’ve got to be concerned about it,” said Jon Leibowitz, a former chair of the US Federal Trade Commission. “It may lessen competition and raise prices.”
Paramount has contended in correspondence to Warner Bros. And in public forums that its agreement is considerably more likely to win approval from oversight bodies. The Justice Department opted not to provide remarks regarding its perspective on a Paramount transaction.
‘Extremely Confident’
Netflix co-Chief Executive Officers Ted Sarandos and Greg Peters told investors at a conference in New York on Monday that they’re “extremely confident” that their deal with Warner Bros. Will be approved. While that deal would create a streaming colossus from the marriage of Netflix with HBO MAX, a Paramount deal wouldn’t result in the same concentration in the streaming market.
A Paramount deal would put together Max and Discovery+ with Paramount+. Together, Warner and Paramount’s streaming services would amount to less than 3.5% of TV consumption, according to Nielsen data. That’s far below YouTube, which commands about 13% of viewing, and Netflix, at 8%.
“There’s probably a positive, ‘consumers win’ story with Paramount given it could scale up in streaming to challenge Netflix,” said Paul Gallant, a regulatory risk analyst with TD Securities.
Gallant noted that there is still a “non-trivial antitrust risk for Paramount. That stems from consolidating studios and TV programming, risking higher movie ticket prices and pay-TV prices for consumers.”
Netflix could also argue that the US market is made more competitive by the widespread popularity of ByteDance Ltd.’s TikTok, which has some 170 million active users in the US.
Democratic state attorneys general are also expected to take a proactive stance if they perceive the White House is unfairly influencing matters in favor of Paramount, according to Gallant.
Democratic States
States governed by Democrats, such as New York and California, might create obstacles for Paramount, according to Harold Feld, the senior vice president at the consumer advocacy organization Public Knowledge.
“Whether or not DOJ steps up, I think the states will look at this very carefully,” Feld said in an interview after Paramount’s initial offer in October. “What they’ll be looking at is overlap in program production and streaming to see where there’s likely to be anticompetitive harm.”
Feld additionally pointed out that any agreement would also require approval in Europe and the United Kingdom, regions where he stated competition regulators typically adopt a wider perspective when identifying pertinent markets.
The consolidation of two prominent film production companies from the sector's five major players might also spark worries regarding potential workforce reductions, according to Eric Schiffer, the chief executive of the Patriarch Organization, an entity that finances ventures in digital and media sectors. “The battleground will be the unions, but at a certain point they lose leverage.”
Lawmakers are also watching a potential Paramount deal closely. Senate Majority Leader John Thune, a South Dakota Republican, said the Justice Department would have to take a “hard look” at a Paramount-Warner tie-up if the companies agree to a deal, saying the combination would “seem to create a pretty heavy” antitrust issue from knowing “about those companies and what they bring at the table.”
