Paramount’s WBD Bid Clears Antitrust Hurdle, But Battle With Netflix is Far From Over
Paramount Skydance has passed a significant, though often misleading, milestone in its pursuit of Warner Bros. Discovery (WBD). The company announced Friday that the 10-day waiting period mandated by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 has expired. This means, technically, there are “no statutory impediments” to closing the acquisition. However, experts caution that this doesn’t equate to full regulatory approval.
The HSR Act: A First Step, Not a Finish Line
The Hart-Scott-Rodino (HSR) Act requires companies to notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) before completing mergers or acquisitions that meet certain thresholds. The waiting period allows regulators to review potential antitrust concerns. As Bill Rinner, a former top DOJ antitrust official, warned, the expiration of this waiting period doesn’t guarantee a deal will be approved. Investigations can, and often do, continue even after this initial phase.
Netflix Fires Back: Accusations of Misleading Investors
Netflix, which has its own agreement with WBD for a sale of assets, is pushing back strongly against Paramount’s characterization of the HSR expiration. David Hyman, Netflix’s Chief Legal Officer, accused Paramount Skydance of “misleading stockholders and distract[ing] from the facts.” Netflix argues that the HSR milestone is routine and doesn’t signal any form of DOJ approval. The streaming giant is also currently responding to the DOJ’s second request for information, triggering another 30-day waiting period.
A Hostile Bid and a Looming Shareholder Vote
Paramount has launched a hostile tender offer of $30 per share in cash for all of WBD, whereas Netflix’s deal is structured as a mix of cash and stock, valuing WBD assets at $27.75. WBD’s board has repeatedly rejected Paramount’s advances, but the company engaged in seven days of talks with Paramount this week. Analysts believe Paramount may need to increase its offer to appease WBD shareholders. Those shareholders are scheduled to vote on the Netflix deal – and the process of spinning out Discovery Global – on March 20.
Beyond the DOJ: Global Regulatory Scrutiny
Even with U.S. Regulatory clearance, both Paramount and Netflix will need to secure approvals from regulators around the world. This adds another layer of complexity and potential delay to either transaction. The deals have already sparked debate among lawmakers, unions, and industry players, raising questions about market concentration and the future of media ownership.
Political Pressure Mounts on Paramount
Senate Democrats have threatened an investigation into Paramount, requesting information about the company’s interactions with the Trump administration regarding its pursuit of WBD. This adds a political dimension to the already complex situation.
What Does This Mean for the Future of Media Mergers?
The battle for WBD highlights the increasing scrutiny of large media mergers. Regulators are taking a closer look at potential antitrust concerns, particularly in the streaming landscape. The fact that Paramount proceeded with regulatory approvals without a firm deal in place is unusual and suggests a high degree of confidence – or risk-taking – on their part.
The Rise of Hostile Takeovers in the Streaming Era
Paramount’s hostile bid for WBD could signal a trend towards more aggressive takeover attempts in the streaming industry. As companies seek to consolidate and gain scale, we may see more unsolicited offers and proxy fights. This could lead to increased volatility and uncertainty in the market.
The Importance of All-Cash Offers
The fact that Paramount’s offer is entirely in cash, while Netflix’s includes stock, may be a factor in the DOJ’s review. All-cash deals are often viewed more favorably by regulators, as they don’t involve the complexities of stock valuation and potential conflicts of interest.
FAQ
Q: Does the HSR Act approval guarantee the deal will proceed through?
A: No, it does not. It simply means there are no initial statutory roadblocks. The DOJ can still investigate and potentially block the deal.
Q: What is Netflix’s position in all of this?
A: Netflix believes Paramount is misleading investors and that the HSR expiration is a routine step, not a sign of approval.
Q: What happens next?
A: WBD shareholders will vote on the Netflix deal on March 20. Both Paramount and Netflix will continue to respond to DOJ requests for information and seek regulatory approvals globally.
Did you know? Makan Delrahim, Paramount’s chief legal officer, previously led the Justice Department’s Antitrust Division during the Trump administration.
Pro Tip: Keep a close eye on regulatory filings and statements from the DOJ, FTC, and the companies involved for the latest updates on this evolving situation.
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