FCC chairman says CNBC WBD-Paramount merger deal ‘cleaner’ than Netflix

FCC Chairman Brendan Carr told CNBC Paramount’s Bid to buy Warner Bros. Discovery is “cleaner” than of NetflixHe expected it to be approved “very soon”.

“There are a lot of concerns when Netflix is ​​a potential buyer,” Carr said on the sidelines of Mobile World Congress in Barcelona on Tuesday. “That particular combination has raised a lot of competition concerns.”

Paramount Skydance last week made a revised offer to buy all of WBD for $31 per share, up from $30 per share, which WBD’s board considered better than the existing Netflix offer.

Netflix is ​​set to buy the media giant’s studio and streaming businesses for $27.75 per share, but said it was “no longer financially attractive” in light of Paramount’s offer.

Carr spoke with CNBC’s Arjun Kharpal in a wide-ranging discussion about the WBD-Paramount merger, which will require signoff from regulators.

Carr told CNBC that while Netflix “has a very difficult path” to getting regulatory approval, Paramount’s is “very clean, doesn’t raise all kinds of concerns.”

“I think there are some real consumer benefits that come out of that,” he said.

Both deals raised antitrust questions around the US theatrical industry, prompting concerns about potential job losses or smaller film slates in Hollywood. Netflix’s proposed merger raised questions about streaming dominance, as it would bring together two popular streaming services in Netflix and WBD’s HBO Max.

On Monday, Paramount said it plans to release at least 30 films annually, or 15 per studio. After the transaction is completed, its streaming service Paramount+ will be integrated into one service with HBO Max, executives said.

It’s unclear what the regulatory process will involve for Paramount and WBD. The FCC typically reviews deals involving one of the nation’s broadcasters, including Paramount’s CBS, and last year supported Paramount’s merger with Skydance.

“If there’s any FCC role, it’s going to be a very small role. And I think it’s a good deal and I think it should pass very quickly,” Carr added.

Like Netflix’s proposed deal, Paramount’s bid would include WBD’s pay-TV networks CNN, TBS and TNT.

Paramount paid a $7 billion breakup fee if the deal doesn’t get regulatory approval. It has already paid the $2.8 billion breakup fee that WBD owed Netflix because that deal was called off.

Some of the concerns surrounding the Netflix-WBD deal include higher consumer prices and less competition.

US President Donald Trump said in December that the potential deal “could be a problem” because it would give Netflix more market share. He walked back those comments a month later, saying the deal would only be reviewed by the Justice Department.

In a statement, Democratic Sen. Elizabeth Warren called the Paramount and WBD merger “an antitrust disaster that threatens American families with higher prices and fewer choices.”

Analysts at investment bank Raymond James said last week that a Paramount-WBD deal would be “meaningfully easier” than a Netflix deal.

“There are new challenges with this deal around news, cable networks, international linear networks, etc., but we still think the WBD/PSKY deal is the most palatable of all,” the analysts wrote.

“And, particularly following the reaction to the WBD/NFLX deal, we believe that PSKY’s political standing with the current US administration is much stronger than that of Netflix.”

However, Paren Knadjian, a partner at consulting firm EisnerAmper, said last week that the Paramount-WBD deal is not necessarily a done deal, adding that the path forward looks more nuanced.

The Netflix-WBD deal is primarily focused on library content, while Paramount’s deal is a “horizontal consolidation” between cable TV, sports, streaming and news, he said.

“The biggest thing we’re going to focus on is centralizing intellectual property under one roof,” Nadjian told CNBC. “What power does that give this new unit in terms of high charging capability?”

“Regulatory pressure, political pressure, these will certainly delay the deal and make it more complicated, and I think there will have to be significant concessions to get through it,” Nadjian added.

There is also the outstanding question of whether the Committee on Foreign Investment in the United States will find a problem with the treaty’s structure. Paramount’s contribution included about $24 billion from the Gulf state’s sovereign wealth fund.

— CNBC’s Lillian Rizzo and Alex Sherman contributed to this report