California regulators have warned that any takeover of Paramount will face close scrutiny, regardless of which bidder ultimately prevails.
Rob Bonta, the state’s attorney general, said the deal was far from settled. He stressed that the companies involved had not yet cleared regulatory hurdles and that California intended to conduct a thorough review.
“It is not a done deal,” Bonta said. “These two Hollywood titans have not cleared regulatory scrutiny, and we intend to be vigorous in our review. The proposed WBD transactions must receive a full and robust review, and California is taking a very close look.”
Under the proposed deal, Warner Bros Discovery shareholders would still need to approve Paramount’s merger with the company. With no rival bidders remaining, that vote is widely expected to be a formality.
Ben Barringer, head of technology research at the investment firm Quilter Cheviot, said a Paramount takeover was unlikely to disrupt the media industry to the same extent as a successful bid from Netflix would have done.
Despite this, significant job losses are expected. Around $3bn in cuts have already been announced following the merger of Skydance and Paramount, with a further $6bn in cost savings outlined in filings related to a potential Warner Bros Discovery takeover.
Shares in Netflix rose by as much as 10% in after-hours trading, as investors reacted with relief. The company had faced concerns over the scale of a Warner Bros Discovery deal, its strategic fit and the likelihood of regulatory resistance.
Paramount shares climbed almost 9% in pre-market trading, driven by expectations that a combined group could achieve the scale needed to compete more effectively with Netflix, Amazon and Disney in film, television and streaming.
Robert Fishman, a senior analyst at MoffettNathanson, said securing the deal was critical for Paramount, which has arranged $54bn in debt financing to complete the takeover.
“This result confirms our long-held view that WBD was a necessity for Paramount Skydance, while Netflix was acting opportunistically,” he said.
