Discovery, WarnerMedia union cleared by Justice Department

Discovery Inc.’s takeover of WarnerMedia moved closer to completion after the U.S. Justice Department declined to challenge the deal.

In a regulatory filings Wednesday, Discovery and AT&T said the time period had expired for the Justice Department and the Federal Trade Commission to try to block the $43-billion merger of Discovery and WarnerMedia, the parent company of HBO, CNN, TBS, Cartoon Network and the Warner Bros. film and TV studio.

AT&T currently owns WarnerMedia, but the cellphone giant has been eager to exit Hollywood after its failed foray into the entertainment business.

The Dallas-based telecommunications company acquired WarnerMedia just three and a half years ago after a protracted court battle with the Justice Department over whether that deal violated U.S. antitrust laws. Then-President Trump, who despised CNN because of its unfavorable coverage of him, was insistent that AT&T’s purchase of the WarnerMedia assets be stopped.

This time around, the Justice Department did not intervene. Instead, federal officials have been looking more closely at Silicon Valley giants, Facebook, Google and Amazon, the latter of which is trying to acquire the MGM studio.

Despite opposition from more than 30 Democratic members of Congress who in December said the planned consolidation “raises significant antitrust concerns,” President Biden’s Justice Department, led by Attorney General Merrick Garland, showed little interest in challenging the tieup between two traditional media companies.

Approval from the Justice Department was one of the final hurdles the two companies needed to clear in order to finalize the union they announced last May.

With this week’s development, the companies said in an Securities and Exchange Commission filing that they have now satisfied closing conditions.

Discovery shareholders still must vote on the merger.

Shareholder approval is largely certain because investors with more than 40% of the vote — cable pioneer John Malone and the Advance Newhouse media company — already have signaled their support. The merger should be complete in April or May.

The landmark deal comes amid upheaval in the industry as traditional media companies grapple with declining ratings, consumer cordcutting and the rising threat posed by Netflix, Hulu, Disney Plus and other streaming services. Since its launch in May 2020, WarnerMedia’s HBO Max streaming service has gained traction and has more than 73 million subscribers.

The combination will bring together some of the biggest names in television — HBO, CNN, HGTV, Animal Planet and Food Network — and the Warner Bros. movie studio. Discovery’s streaming service, Discovery Plus, has also carved out a potent niche for viewers who love its crime stories and comfort food programming.