Paramount accuses Netflix of ‘scorched-earth campaign’ to torpedo Warner Bros. Discovery acquisition in letter to DOJ

The regulatory path towards approval of Paramount’s acquisition of Warner Bros. Discovery, at least at the federal level, has seemed relatively smooth sailing since the two sides formally agreed to a merger earlier this year. Last month, a report surfaced that the Department of Justice was “ready to approve” the transaction, which would see the two storied Hollywood studios combine into a single entity.

However, challenges remain to push the transaction across the finish line. Numerous state attorneys general are gearing up to challenge the deal at a state level, and regulators in Europe could also pose issues for the two companies.

Despite the seemingly clear path for federal approval, Paramount’s legal team isn’t pulling any punches in its defense of the deal to regulators. In fact, Paramount is calling out Netflix, the company that initially secured a deal to purchase Warner Bros. Discovery, until Paramount’s repeated overtures and sweetened offers became too good to pass up, for attempting to sabotage the transaction now that it is in the approval phase.

According to a letter sent by Paramount’s chief legal officer to the Department of Justice, which was obtained by Politico, Paramount is accusing Netflix of conducting a “scorched-earth campaign” to derail the merger. In the letter, Paramount claims Netflix is attempting to “poison regulators and other stakeholders” to torpedo the deal.

Interestingly, Paramount is using Netflix’s supposed “panic-level response” to argue that its merger with Warner Bros. Discovery is pro-competitive, because it shows “just how seriously Netflix takes Paramount as a scaled competitor.”

Netflix, in a statement to Deadline, denied any attempts to sabotage the deal. “These claims from Paramount Skydance are absurd. We walked away from this deal months ago and remain focused on our own business, not theirs. Ultimately, it’s up to the regulators to approve this deal and determine if it is in the best interest of the industry and all concerned,” Netflix said.

Hollywood trade unions have been skeptical of the deal, contending that the combination will result in fewer productions and, thereby, fewer jobs. Paramount has strongly pushed back against that sentiment, claiming the merger “will not reduce work opportunities” and adding, “Increasing production volume is the central pillar of how Paramount intends to compete.”

Paramount is publicly targeting the third quarter of this year to complete the transaction, with reports indicating internal expectations that the deal will close next month.

The combination of Paramount and Warner Bros. Discovery would almost certainly result in a single sports entity between CBS Sports and TNT Sports. League executives with existing deals with either sports division have already begun speculating about how the unified company could benefit their leagues. For instance, NHL commissioner Gary Bettman has been open about the possibilities of some games moving to CBS after the deal concludes. Similarly, UFC fights could begin airing on TNT if a deal closes.