The U.S. Department of Justice has initiated a review of the potential consequences that a sale of Warner Bros Discovery Inc could have on large national movie theatre chains, according to reporting that cites officials familiar with the matter. As part of that review, government lawyers have called in some of the country’s biggest exhibitors to evaluate how various sale scenarios might affect theatrical distribution and competition.
The inquiry comes as Warner Bros has recently rebuffed a hostile takeover proposal from Paramount Skydance Corp in favor of a separate transaction with Netflix Inc. Even after rejecting the Paramount bid, Warner Bros allowed Paramount a period of seven days to submit a "best and final" offer.
Paramount’s proposal would value Warner Bros at about $108.4 billion, equating to $30 per share for the company. Netflix’s competing proposal is focused on Warner Bros’ studio and streaming operations and carries a valuation of about $82.7 billion, or $27.75 per share. Warner Bros is scheduled to put the Netflix offer to a shareholder vote on March 20.
The DOJ’s outreach to theatre operators aims to gather information directly from the exhibitors that could be affected by a change in ownership or strategy at a major studio and streaming company. The reporting indicates that the government is seeking the views of industry participants to assess potential impacts on theatrical windows, distribution agreements, and competitive dynamics between studios and national theatre chains.
At present, Warner Bros has taken a clear procedural step by notifying Paramount that it will consider a final improved bid within a short window, while moving forward with plans to consult shareholders on the Netflix transaction. The shareholder vote for the Netflix proposal remains scheduled for March 20.
Context and next steps
Government interviews with theatre chains are an early stage of the review process; the outcome of that review and any subsequent decisions by regulators are not detailed in the reporting. Warner Bros continues to manage both the competing acquisition proposals and the regulatory attention that has arisen amid those bids.