US Justice dept digs in on the dueling takeover bids for Warner Bros.

Warner Bros. said in a regulatory filing that the Justice Department opened up the review on December 23

• DOJ is reviewing Paramount's hostile bid for Warner Bros. Discovery
• Warner Bros. rejected Paramount's offer, sticking with Netflix's $82.7B deal
• Both Netflix and Paramount deals face antitrust scrutiny in US and Europe

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The heated battle to acquire Warner Bros. Discovery Inc. has expanded from the boardroom to the US Justice Department, with the disclosure Wednesday that the agency is conducting an in-depth review of Paramount Skydance Corp.’s hostile tender offer for the company behind HBO and the Harry Potter and Batman franchises.

Warner Bros. said in a regulatory filing that the Justice Department opened up the review on December 23. Netflix Inc., which signed an $82.7 billion deal with Warner Bros. last month, also said Wednesday that it’s engaging with antitrust authorities, including the DOJ and the European Commission.

Warner Bros. on Wednesday again rejected Paramount’s bid as insufficient, opting to stick with Netflix’ offer.

The rejection, however, doesn’t let Warner Bros. escape dueling antitrust reviews, meaning it will have to respond to DOJ information requests on both deals until one company backs out. US antitrust law requires companies making cash tender offers to go through the regulatory approval process, even if the seller is an unwilling party.

Warner Bros. declined to comment. Spokespeople for the DOJ, Paramount and Netflix didn’t immediately respond to requests for comment.

Paramount has maintained that its bid offers Warner Bros. a more certain path to US government approval than a tie-up with Netflix, which it says would make the world’s biggest streaming company even bigger.

The extended DOJ review now calls that claim into question. A Paramount deal would bring under one roof two of the big five movie studios, two large streaming services and the competing news divisions of CNN and CBS.

As part of the reviews of both deals, the Justice Department lawyers will examine documents and interview industry participants to determine whether the mergers will harm competition.

The Netflix deal has faced wide-ranging criticism from Hollywood and Washington. In a House Judiciary Committee hearing earlier Wednesday, lawmakers from both parties criticized the Netflix deal, which would give the company more than 30% of all streaming for paid content, a key threshold for antitrust investigators when scrutinizing a merger.