Paramount has successfully cleared a 10-day waiting period following its response to a second request for information from the Department of Justice (DOJ) regarding its unsolicited acquisition offer for Warner Bros. Discovery (WBD). The company announced that the expiration of this waiting period under the Hart-Scott-Rodino Antitrust Act signals that there are no statutory barriers in the U.S. to proceed with the acquisition, despite the fact that there is currently no finalized deal to close.
Interestingly, Paramount initiated the regulatory approvals process even without having a binding agreement in place, as WBD has already committed to selling its assets to Netflix. This unusual move has drawn attention, especially in light of Netflix’s reaction. David Hyman, Netflix’s Chief Legal Officer, criticized Paramount’s characterization of the situation, asserting that the expiration of the waiting period does not imply DOJ approval or that any decisions regarding the merger have been finalized. Hyman emphasized that Paramount has not secured the necessary approvals to close the deal and still has a significant way to go.
In contrast to Paramount’s assertions, Netflix representatives have cautioned investors not to confuse the expiration of the Hart-Scott-Rodino waiting period with actual regulatory clearance. Analyst firm Guggenheim highlighted that past DOJ investigations have continued even after the waiting period lapsed. Bill Rinner, a former senior antitrust official at the DOJ, had previously warned against interpreting the expiration as a sign of approval for a transaction.
Netflix is currently involved in responding to its own second request for information from the DOJ, which will trigger an additional 30-day waiting period. Sources indicate that the waiting period for all-cash offers, like Paramount’s proposal, could be shorter than usual, adding yet another layer of complexity to the negotiations. Paramount’s chief legal officer, Makan Delrahim, previously led the DOJ’s Antitrust Division during the Trump administration, which may provide some insight into the ongoing regulatory discussions.
Paramount is pursuing a hostile tender offer, proposing $30 per share in cash for all of WBD. By contrast, Netflix’s offer is a combination of cash and stock valued at approximately $27.75 for Warner Bros.’s streaming and studio assets. Although WBD has consistently rebuffed Paramount’s approaches, recent developments include a period of talks between the two companies where Paramount aims to address WBD’s board concerns regarding its latest offer. Observers suggest that Paramount may need to enhance its financial offer to make a compelling case for acquisition.
WBD has scheduled a shareholder vote for March 20 to decide on the Netflix deal as well as on launching the process to spin out Discovery Global. Even though the market landscape is shifting, the DOJ retains the authority to challenge or sue to block any proposed transaction at any stage of the process. Additionally, both Netflix and Paramount would require regulatory approvals on an international scale in tandem with stakeholder agreements.
The unfolding situation has prompted scrutiny from various stakeholders, including lawmakers and industry officials. Senate Democrats have threatened to investigate Paramount, sending a formal inquiry to CEO David Ellison regarding the company’s communications with the Trump administration and the president concerning its pursuit of WBD. The ongoing negotiations and the regulatory landscape present a complex web of interests and potential consequences, keeping both industry analysts and shareholders on high alert.
