The news: A two-hour meeting with the DOJ on Tuesday may have secured Paramount-Skydance regulatory approval for its $110 billion Warner Bros. Discovery acquisition, Semafor reports.

• Paramount CEO David Ellison reportedly emphasized his commitment to release 30 movies annually amid concerns that the acquisition could harm the theater business.
• Semafor notes that DOJ staff attorneys who met with Ellison “seemed swayed” by his argument that a merger would not hurt other studios or industry talent.
• The discussion touched on how Disney’s 2019 acquisition of Fox led to fewer films in theaters and more on Disney’s streaming service; Ellison and Paramount officials told DOJ staff that data was “skewed by the pandemic year” when studios shifted to at-home streaming options.

Hurdles remain: Despite the progress, Paramount still has several barriers to cross before it can close its WBD acquisition.

• Paramount is bracing for a legal battle with California’s attorney general Rob Bonta, who has indicated plans to attempt to block the merger. Bonta stated in February that California officials are “committed to fighting market consolidation that we find unlawful.”
• Over 5,000 individuals in the entertainment industry have signed an open letter urging Bonta to take action against the merger. Signatories argued that the acquisition would reduce creative opportunities, cut jobs, increase consumer costs, and limit audience choice.

What happens if the deal closes? Should Paramount win its impending legal battles, the combined company would become one of the most powerful players in entertainment, spanning film, TV, news, sports, video games, and streaming. Marketers would face a consolidated media landscape, with fewer major sellers controlling a larger share of premium video inventory.

• Paramount plans to merge HBO Max and Paramount+, which would create a platform that commands a sizable portion of streaming audiences.
• We forecast 50 million US HBO Max and Paramount+ dual users already exist, growing to 63.6 million by 2028. Combining the two entities—home to properties like Harry Potter and Transformers and news channels including CNN and CBS—could create a more compelling streaming bundle capable of competing with Netflix, Disney, and Amazon.
• Consolidation could reduce content volume—meaning marketers could see simpler media planning, but will simultaneously have to contend with increased competition for ad space and a merged company that wields significant pricing power.