The US Department of Justice has cleared Paramount Skydance’s $111 billion acquisition of Warner Bros Discovery, removing the largest federal regulatory hurdle for a deal that would reshape the American media landscape. The competition division, after an eight-month inquiry involving more than two million documents and sworn testimony, said on Friday that the merger was “not likely to result in harm to competition or American consumers” across streaming, linear television, and film production and distribution. Crucially, the government imposed no conditions and required no asset sales, a decision that stunned some antitrust observers.

Viewed from Washington, the approval underscores the political dimension of the transaction. David Ellison, who leads Paramount Skydance, is the son of Oracle co-founder Larry Ellison, a prominent backer of President Donald Trump. The younger Ellison had met with Justice Department officials recently, according to people familiar with the matter, and the administration’s blessing was widely expected. The DOJ even went beyond a simple clearance, asserting that the tie-up would “increase competition across the media and entertainment ecosystem, with benefits for American consumers and workers” – a statement that raised eyebrows in competition law circles in Brussels and London.

Yet the federal green light does not guarantee completion. A coalition of state attorneys general, spearheaded by California, has been conducting its own investigation and is preparing a lawsuit to block the merger. The states argue that combining two of Hollywood’s five largest studios, along with their cable news networks, streaming platforms, and film libraries – from CNN and HBO to Star Trek and Harry Potter – poses an unacceptable concentration of market power. This sets the stage for a protracted legal battle reminiscent of past efforts by state enforcers to fill a perceived enforcement gap left by the federal government.

Across the Atlantic, European Union regulators are yet to weigh in. Paramount has already sought approval from the Federal Communications Commission for foreign investments backing the deal, following concerns raised by US senators over the involvement of Middle Eastern sovereign wealth funds and Chinese entities. The European Commission’s review, likely to focus on the impact on Europe’s media markets and potential competition concerns, adds another layer of uncertainty. Analysts in London note that while the DOJ’s decision provides momentum, the deal’s fate remains far from sealed.

The merger, if consummated, would create an entertainment colossus uniting the Paramount and Warner Bros studios, CBS and CNN, and franchises spanning Mission: Impossible to DC Comics. Proponents argue that scale is essential to compete with tech giants like Netflix and Apple in the streaming wars. Critics warn of job losses, reduced creative output, and higher prices for consumers. With the federal antitrust barrier cleared, attention now turns to the courts and to European regulators, whose verdicts will determine whether this mega-merger becomes a reality or unravels under legal and political pressure.