Justice Dept. approves Paramount's acquisition of Warner Bros. Discovery
The DOJ has cleared the proposed $110 billion merger between Paramount and Warner Bros. Discovery, removing the key regulatory overhang on the deal. With regulatory approval in hand, attention shifts to deal execution risk, balance sheet stress, and whether the combined entity can reverse WBD's declining revenues.
DOJ approval clears the hardest hurdle, and historical precedent shows arb spreads compress meaningfully post-regulatory sign-off — PARA in particular carries a smaller balance-sheet burden and could see a clean re-rate toward deal consideration.
WBD's FY2025 revenue is already shrinking at -5.1% YoY with only a 2.0% net margin, meaning the combined entity inherits a structurally stressed income statement, which could trigger a renegotiation of deal terms or a wider-than-expected spread as investors discount execution risk.
