The proposed $110 billion acquisition of Warner Bros. Discovery (WBD) by Paramount Skydance (PSKY) may win the Department of Justice (DOJ) approval after antitrust talks reportedly signal early support.

Paramount CEO David Ellison spent two hours on Tuesday with DOJ antitrust staff, assuring them that the merged entity would continue to release movies in theaters, reported Semafor. This meeting was a response to concerns that the merger might prioritize streaming platforms over traditional theaters, a concern shared by Hollywood talent and California Attorney General Rob Bonta.

The DOJ staff attorneys, who have previously disagreed with President Donald Trump-appointed DOJ leaders over merger approvals, appeared to be persuaded by Paramount's argument that the merger would not negatively affect other studios and creative talent, as per the publication.

The talks also referenced Walt Disney Co. (DIS)'s acquisition of 21st Century Fox in 2019, which resulted in fewer films being released in theaters and more on Disney's streaming service. Paramount officials, including Ellison, argued that the data was skewed due to the pandemic, which saw studios favoring at-home streaming over theatrical releases.

While discussions are still ongoing, the department's analysis could change, suggested the report.

Paramount and Warner Bros. Discovery did not immediately respond to requests for comment.

Antitrust Fears Surround Merger

The proposed merger has been a topic of concern in Hollywood and beyond. Earlier this month, Paramount legal chief Makan Delrahim, a former Justice Department antitrust regulator, told Bonta that theatres will remain vital to the film industry and that both companies plan to continue releasing a broad range of movies globally, reported Semafor. Meanwhile, Bonta warned of potential antitrust concerns, citing risks such as higher prices, job losses, reduced quality, and less competition as California considers possible legal action against the deal.

There were also concerns about the debt deal associated with the merger. Some investors raised concerns over the economics of the offer, particularly because certain shorter-maturity bonds would receive enhanced coupon terms while some longer-dated debt would not.

Sen. Elizabeth Warren (D-Mass.) also expressed concerns that the merger could limit the diversity of content, potentially causing shows like 'Severance' to disappear and concentrate excessive control over Hollywood's future in the hands of politically influential media executives.