Paramount Skydance's $111 billion acquisition of Warner Bros. Discovery (WBD) has found an ally in Federal Communications Commission Chairman Brendan Carr. In a statement to CNBC, Carr expressed that the merger between Paramount and WBD is significantly simpler compared to the earlier, unsuccessful attempt by Netflix to purchase WBD.
According to Carr, Netflix’s potential merger with WBD faced major regulatory challenges due to the vast size and reach of the proposed combined streaming entity, which would have included Netflix and HBO Max. Concerns in Washington, D.C. about Netflix's capabilities in acquiring WBD contributed to the collapse of their deal.
Netflix chose not to pursue the purchase after Paramount offered a better deal. While Paramount intends to merge its Paramount+ streaming service with HBO Max, Carr stated that this merger does not evoke the same regulatory issues as the Netflix plan. “I think there’s some real consumer benefits that could emerge from it,” he noted.
The transaction is spearheaded by Paramount Skydance CEO David Ellison, with significant financial support from his father, Larry Ellison, who committed $40 billion to the deal. The Ellison family also seems to have secured the endorsement of President Trump for this merger.
The FCC plays a crucial role in reviewing mergers where broadcast licenses are involved, although in this scenario, there are no broadcast licenses being transferred because WBD does not hold any TV broadcast licenses. Nevertheless, Paramount Skydance must adhere to the FCC's foreign ownership regulations since it owns and operates 28 local CBS stations.
The acquisition financing may partially originate from foreign investors, necessitating an FCC assessment to ensure compliance with rules that prevent foreign entities from controlling broadcasters.