Jared Harbour
The rumored merger between Paramount and Warner Bros. Discovery (“WBD”) isn't just another media deal.[1] It's the first real test of whether the Department of Justice (“DOJ”) and Federal Trade Commission's (“FTC”) revised 2023 Merger Guidelines have actual teeth.[2] This transaction could trigger multiple structural presumptions of illegality under Section 7 of the Clayton Act, setting up a potential antitrust battle of historic proportions.[3]
What makes this fight particularly fascinating is that the merging parties can't hide behind the usual "this is just business efficiency" playbook.[4] The math, market shares, and new guidelines all point to a potentially tense encounter.
The August 2025 Skydance-Paramount merger, from an antitrust perspective, was relatively uneventful.[5] Skydance was primarily a production company that financed content but lacked significant distribution assets.[6] The proposed Paramount-WBD transaction presents a significantly different entity, one that would combine two fully integrated entertainment conglomerates, each possessing substantial market power in theatrical distribution, streaming, cable networks, and content production.
This distinction between complementary mergers (which can be pro-competitive) and horizontal mergers (which eliminate a direct competitor) is crucial to antitrust law.[7] The numbers prove why. In theatrical film distribution, Warner Bros. commands approximately 28.02% of the domestic market while Paramount Pictures holds 6.52%.[8] The combined 34.54% market share crosses the 30% threshold that creates a presumption of illegality, when combined with a change in Herfindahl-Hirschman Index (HHI) of more than 100.[9]
The theatrical distribution market is already concentrated, with a pre-merger HHI of approximately 1,758.[10] Under the 2023 Guidelines, any market with an HHI greater than 1,800 is
considered "highly concentrated."[11] Using the formula ΔHHI≈2×(Share₁)×(Share₂),[12] this merger would increase the HHI by approximately 365 points, pushing the post-merger HHI to 2,123.[13] An increase of this magnitude, which pushes a market across the "highly concentrated" threshold, creates a powerful presumption that the merger's effect "may be substantially to lessen competition."[14] This isn't abstract economic theory but a direct implementation of Supreme Court precedent from United States v. Philadelphia National Bank.[15]
However, as mentioned earlier, Max and Paramount’s operations extend far beyond just distribution, with any potential legal battle sparking a contest over how the court defines each firm’s retrospective “market”. The legal standard, established in Brown Shoe Co. v. United States, centers on “the reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for it.”[16] In other words, do consumers treat the products as realistic substitutes? The government will likely argue that Max and Paramount operate in a narrow market where the merging parties compete head-to-head while the companies claim theatrical distribution competes with everything from Netflix to TikTok.[17]
The vertical concerns extend far beyond content foreclosure to self-preferencing and information advantages. The merged entity could leverage viewership data from distribution platforms to inform content strategies, creating data-driven advantages that disadvantage non-integrated competitors.[18] These concerns become particularly acute when considering the potential impact of a new entity on news media concentration, given that the combination would unite CNN and CBS News (two of the largest news networks) under a single corporate control, creating unprecedented concentration in national television news.[19]
This consideration alone compels review by the Federal Communications Commission, whose authority to approve license transfers hinges on a "public interest" standard that deliberately transcends the circumscribed logic of antitrust analysis.[20] Federal courts have long recognized that news media diversity serves democratic values beyond economic efficiency, treating news as a "public good" where social value often exceeds market value.[21]
These broader implications explain why the regulatory response should establish crucial precedent for Section 7 enforcement in concentrated industries. However, if the Skydance-Paramount merger taught us anything, it is that relational politics will play just as much, if not more of a role than substantive law. Congressional lawmakers have already explicitly questioned whether backdoor agreements between Ellison and Trump influenced the Paramount acquisition process, raising concerns about the integrity of media merger reviews.[22] The confluence of President Trump’s relationships with both WBD and Paramount’s CEOs suggests that whatever mathematical elegance the HHI calculations may possess, the ultimate decision may rest less on antitrust doctrine than on political accommodation.
[1]See, e.g., Sara Fischer & Dan Primack, Scoop: Warner Bros. Discovery in talks to merge with Paramount Global, Axios (Dec. 20, 2023).
[2] U.S. Dep't of Justice & Fed. Trade Comm'n, Merger Guidelines (2023) [herein referred to as “Merger Guidelines”].
[3] 15 U.S.C. § 18.
[4]See William J. Baer & Jonathan B. Baker, The New Merger Guidelines: A Comeback Tour for an Old Friend, ProMarket (July 24, 2023).
[5]See Georg Szalai & Alex Weprin, Skydance Closes $8 Billion Paramount Deal, Creating “Next-Generation Media and Tech” Giant (August 7, 2025).
[6] Skydance, About, https://skydance.com/about/ (last visited Sept. 12, 2025).
[7]See, e.g., Fed. Trade Comm'n, Guide to the Antitrust Laws, https://www.google.com/search?q=https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/mergers/types-mergers (last visited Sept. 11, 2025).
[8]See Domestic Market Share for 2025, The Numbers, https://www.the-numbers.com/market/2025/distributors (last visited Sept. 12, 2025).
[9] Merger Guidelines § 2.1 (2023) (stating that in a highly concentrated market, a merger that increases the HHI by more than 100 points is presumptively unlawful); Id.
[10] Calculation based on summing the squares of the individual market shares of the top 10 theatrical distributors for 2025. Data from The Numbers, supra note 9.
[11] Merger Guidelines, supra note 9.
[12] Merger Guidelines, supra note 9, fn 14. (“The change in HHI from a merger of firms with shares a and b is equal to 2ab. For example, in a merger between a firm with 20% market share and a firm with 5% market share, the change in HHI is 2 x 20 x 5 = 200.”).
[13] Calculation based on market share data from The Numbers, supra note 8. The methodology for calculating the change in the Herfindahl-Hirschman Index (HHI) is described in the Merger Guidelines. See Merger Guidelines § 2.1, supra note 9.
[14]15 U.S.C. § 18. See also Merger Guidelines § 2.1, supra note 9.
[15] United States v. Phila. Nat'l Bank, 374 U.S. 321, 363 (1963).
[16] Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962).
[17] See Merger Guidelines § 4.3, supra note 2 (outlining the framework for defining the relevant market).
[18]See generally Maureen K. Ohlhausen & Alexander P. Okuliar, Competition, Consumer Protection, and the Right [Approach] to Privacy, 80 Antitrust L.J. 121 (2015).
[19] See Fischer & Primack, supra note 1.
[20] 47 U.S.C. §§ 309(a), 310(d).
[21] See Associated Press v. United States, 326 U.S. 1, 20 (1945). See also C. Edwin Baker, Media Concentration and Democracy: Why Ownership Matters 34-37 (2007).
[22] Press Release, U.S. House Comm. on the Judiciary Dems., Judiciary Democrats and EC Launch Investigation into Skydance-Paramount Merger (August 12, 2025), https://democrats-judiciary.house.gov/media-center/press-releases/judiciary-democrats-and-ec-launch-investigation-into-skydance-paramount-merger.