WASHINGTON — The Justice Department closed its antitrust investigation into Paramount’s $81 billion acquisition of Warner Bros. Discovery on June 12, overruling career staff who had spent months scrutinizing the deal and had been leaning toward recommending a lawsuit to block it, according to people familiar with the matter.
Staff investigators were told on a Friday that the department would close the investigation, effectively clearing the deal at the federal level, before they had made a final recommendation or had had the chance to object, the people said. The move marked the latest instance in the second Trump administration in which the Justice Department’s senior leadership has diverged from its career antitrust attorneys.
A team of career lawyers who had spent months reviewing the deal were leaning toward recommending a lawsuit challenging the combination of the two movie studios on the grounds that it would be anticompetitive and violate antitrust law, the people said. The staff investigators had not yet made a final recommendation — a typical step in the deal-review process — when they were told the investigation would close.
Justice Department senior leaders believed that Paramount Chief Executive Officer David Ellison, son of Trump ally Larry Ellison, persuasively addressed many of the staff’s questions about the deal during a two-hour interview last month, according to people familiar with their thinking. Among the questions from staffers was how the combined company could meet its commitment to make 30 theatrical releases a year given its increased debt load. The senior leaders allowed the inquiries but believed Paramount’s debt was not a reason to challenge the merger, the people said. No one on the investigative team spoke up to leadership voicing support for filing a lawsuit, they said.
On June 12, the department issued a lengthy public statement saying the merger would likely be good for competition, especially in the market for streaming video, where Netflix and Amazon are major players. The statement also said the studio and distribution market has “extensive” competition that would probably continue even after Paramount acquires Warner. Some staffers in the Justice Department’s antitrust division believe the statement was designed to make it harder for state attorneys general to challenge the deal in court, the people said. The investigative staff did not participate in writing the statement, the people said.
California Attorney General Rob Bonta has been reviewing Paramount’s bid and is leaning toward challenging it, The Wall Street Journal reported last month. The deal, which has faced opposition from Hollywood, is also under antitrust review in Europe. Paramount executives have told employees to prepare to close the transaction as soon as the end of July.
MSI previously reported that the Justice Department cleared the deal on June 12, and that state attorneys general were preparing a potential lawsuit. California’s attorney general is considering challenging the transaction, with other states potentially joining.
“Paramount is making strong progress in obtaining regulatory approvals for its pro-competitive merger with WBD,” the company said in a statement. “These regulatory approvals and careful analysis underscore a transaction which creates competition against the dominant Netflix and other big tech players in the industry today.”
The Justice Department’s Paramount investigation is one of several in which antitrust staffers have felt sidelined in the second Trump administration. That includes the department’s decision in March to settle a long-running monopoly case against Live Nation — after the trial had begun. State attorneys general continued to litigate the case and won.