Paramount’s Merger Pitch To Regulators Reportedly Came Down To One Hollywood Promise

• Paramount CEO David Ellison reportedly assured DOJ officials the combined Paramount-Warner Bros. Discovery entity would release at least 30 movies annually in theaters. 
• Regulators and Hollywood critics continue to question whether the studio can realistically maintain a 30-film annual slate. 
• The $110 billion deal still faces scrutiny from California regulators and Congressional Democrats.

Paramount Skydance Corp. (PSKY) may be gaining ground in its push to secure U.S. antitrust approval for its proposed $110 billion acquisition of Warner Bros. Discovery.

According to the Semafor report, during the two-hour meeting, Chief Executive Officer David Ellison reportedly reiterated the commitment to releasing movies in theaters. This has been a key concern for Department of Justice (DOJ) staff members who grilled Ellison on whether the combined company would be less inclined to release movies on big screens, people familiar with the matter said,  according to the report.

The concern was also said to be echoed by Hollywood talent and raised by California Attorney General Rob Bonta, who has warned he could try to block the merger.

At the time of writing, PSKY stock was flat in premarket trading on Wednesday.

California AG, Democrats Raise Job And Competition Concerns

Critics remain skeptical of Ellison's promise to release 30 movies annually, more than either studio has released in recent years. And the proposed merger continues to face political and regulatory scrutiny. 

According to a Variety report, 34 Congressional Democrats have warned of potential job losses in Hollywood and fewer choices for entertainment consumers. These democrats have also sent a letter to California AG Bonta in early May, urging him to "closely scrutinize" the deal.

Earlier this year, in an interview with Reuters, acting antitrust chief Omeed Assefi said that Paramount’s proposed acquisition of Warner Bros Discovery will "absolutely not" have ​a fast track to approval because of political factors. 

"The idea that somehow enforcement has ​been politicized is ludicrous," said ​Omeed Assefi in an interview to Reuters. 

How Paramount Beat Netflix In The Race For WBD

The talks are part of Paramount Skydance’s broader push to build a scaled Hollywood powerhouse capable of competing more aggressively with streaming leaders like Netflix and legacy rivals such as The Walt Disney Company. 

In March this year, Paramount outbid Netflix and entered into a definitive merger agreement with Warner Bros. Discovery (WBD). Paramount said it would pay $31.00 per share in cash for all outstanding shares of WBD, a deal with an enterprise value of $110 billion.

The bidding battle between Paramount and Netflix had emerged as a closely watched takeover contest in the entertainment industry. After Paramount submitted its revised bid, Netflix chose not to increase its offer for Warner Bros, saying that the economics of the deal no longer justified pursuing the transaction. 

“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” Netflix had said at the time. ”However, we've always been disciplined, and at the price required to match Paramount Skydance's latest offer, the deal is no longer financially attractive.”

Netflix had previously struck a deal to acquire Warner Bros Discovery’s studio and streaming businesses in December last year, for a a total enterprise value of about $82.7 billion. 

What Retail Thinks Of PSKY

On Stocktwits, retail sentiment surrounding the stock has remained ‘extremely bullish’, while message volume stayed ‘extremely high‘ over the past 24 hours.

Shares of Paramount Skydance have declined more than 21% so far this year.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Read Next: LUNR Stock On Track To Recover From Previous Rip-And-Dip Action – This Analyst Believes The Selloff Presented An Attractive Entry Point