How Would Modern Antitrust Law Treat a 'Paramount‑Warner' Today?

Hook: Why you should care — and why this matters for 2026

Legal opinions are dense. If you teach, study, or write about competition law, you need a single, plain‑language explanation that connects history to today. Imagine the near‑merger of Paramount and Warner Bros. in 1929 — a consolidation that never happened because of the Crash. Now ask: if that deal were proposed in 2026, how would U.S. antitrust law treat it? This article answers that question using the modern frameworks of the Sherman Act and the Clayton Act, the analytical tools of horizontal and vertical merger review, the lessons of the 1948 United States v. Paramount Pictures decision (the “Paramount decree” lineage), and the enforcement trends shaping merger control in late 2025 and early 2026.

Executive summary — the bottom line up front

If a 1929‑style Paramount‑Warner combination were proposed today, federal enforcers would almost certainly challenge or demand major structural remedies. The transaction raises classic horizontal concerns (consolidation among content producers and distributors) and acute vertical issues (control of distribution channels and exhibition/streaming). Under current practice, the Clayton Act §7 merger review would be the primary vehicle, informed by the Sherman Act’s monopolization doctrine and decades of Paramount‑era precedent. Agencies and courts in the 2020s favor structural remedies — divestitures of overlapping assets or distribution platforms — rather than narrow behavioral fixes.

Why the Paramount precedent still matters

The Supreme Court’s decision in United States v. Paramount Pictures, Inc., 334 U.S. 131 (1948) transformed Hollywood: it broke studio ownership of theaters, banned certain contracting practices such as block booking, and emphasized that vertical integration can harm competition when it enables foreclosure of rivals. Although the industry and technology have changed, the legal principle remains: ownership of distribution channels plus exclusionary practices that limit rival access can create or maintain market power.

The Supreme Court’s Paramount rulings made clear that vertical control of distribution and exhibition can be just as anticompetitive as horizontal concentration — and may require structural remedies.

Frameworks that matter in 2026

Analyze a proposed Paramount‑Warner combination through three lenses:

• Horizontal merger analysis under the Clayton Act §7 and the agencies’ Horizontal Merger Guidelines (concentration, market definition, unilateral and coordinated effects).
• Vertical merger analysis for foreclosure, input‑access denial, and raising rivals’ costs (evaluated under both Clayton §7 and Sherman Act §2 concepts).
• Behavioral and structural remedies — what the agencies are likely to seek, given modern enforcement priorities.

Key statutory tools

• Sherman Act Section 1 (concerted restraints) and Section 2 (monopolization/exclusionary conduct).
• Clayton Act Section 7 (pre‑ and post‑merger control/merger prohibition where competition may be substantially lessened) and Section 8 (interlocking directorates, rarely relevant here).
• Hart‑Scott‑Rodino (HSR) premerger notification and waiting periods — in practice the first gatekeepers for any large media combination.

Step‑by‑step: How enforcement would assess a modern Paramount‑Warner deal

1. HSR filing and initial information requests

A deal of this size would trigger HSR thresholds and prompt immediate second‑request risk. Expect the DOJ Antitrust Division and the FTC (if jurisdiction or state AGs get involved) to demand detailed data on movies, TV content libraries, streaming subscribers, theater ownership, licensing relationships, pricing, and competitor access. In 2026, agencies also ask for information about algorithmic distribution and AI content pipelines — an enforcement priority developed over the late 2020s.

2. Market definition — what markets would be at issue?

Antitrust analysis hinges on the relevant markets. For a studio merger, plausible markets include:

• Upstream content production: box‑office films, theatrical first‑run movies, premium TV series.
• Distribution channels: theatrical exhibition, digital streaming (subscription video on demand — SVOD), ad‑supported streaming, license sales to third‑party streamers and pay TV.
• Input markets: access to talent, exclusive first‑run windows, key distribution platforms (major theater chains or a dominant streaming service).

Market definition would also consider modern viewing patterns: theatrical and streaming markets have significant substitution, but regulatory agencies in recent cases have been receptive to nuanced market definitions that capture platform power (e.g., SVOD versus AVOD distinctions).

3. Horizontal concentration and unilateral effects

Combine Paramount and Warner and you immediately alter concentration among major studios and output suppliers. Applying the Horizontal Merger Guidelines framework, enforcers would calculate pre‑ and post‑merger HHI (Herfindahl‑Hirschman Index) using market shares in relevant content markets. A large increase in HHI — typically >200 points with a post‑merger HHI >2,500 — triggers a presumption of illegality unless rebutted.

Beyond math, agencies ask whether the merged firm could internally coordinate release calendars, withhold top films from rivals, or raise prices for distributors and exhibitors. In contemporary settings, unilateral effects theory also examines whether the merged firm can leverage proprietary content to reduce rivals’ ability to compete.

4. Vertical harms and foreclosure risk

Where the combined firm owns both content and distribution — for example, a studio plus a major streaming service or theater chain — the central concern is foreclosure: denying rivals access to critical inputs or distribution windows. Modern vertical analysis focuses on:

• Input foreclosure: the merged firm could deny or raise prices for licensing of top titles to rival platforms.
• Customer foreclosure: obligations or tying arrangements could block movie theaters or streaming platforms from showing rivals’ content.
• Raising rivals’ costs: such as by controlling ad inventory or distribution algorithms that favor owned content.

Enforcers in 2026 are especially alert to algorithmic leverage: if recommendation engines or proprietary personalization systems can demote unaffiliated content, that is treated as a form of foreclosure in many modern investigations.

5. Potential monopolization concerns

If the merged studio gained durable market power in distribution or a bottleneck input, a Sherman Act §2 challenge could follow. A successful monopolization claim requires proof of both monopoly power and exclusionary conduct — the latter might include exclusive licensing, bundling, or conduct that makes it economically irrational for distributors to carry rivals’ content.

Remedies: What would enforcers demand?

Historical lessons and modern enforcement trends point to one conclusion: agencies prefer structural remedies for big media deals. Expect the following possibilities:

• Divestiture of distribution assets — sale of owned theater chains or streaming platforms to independent buyers to remove foreclosure incentives.
• Firewalls and licensing commitments — limited in effectiveness, often acceptable only as interim fixes; agencies increasingly view them skeptically for core foreclosure risks.
• Behavioral remedies — non‑discrimination clauses or mandatory licensing; useful in narrow cases but less likely for deeply integrated media mergers.

Given the Paramount legacy, a modern agency would weigh divestiture heavily: the original remedy after the 1948 decision was studio divestiture of theaters — a structural fix that reshaped competitive incentives.

How 2026 enforcement priorities shape the outcome

Enforcement in late 2025 and early 2026 reflects three important trends that would affect a Paramount‑Warner filing:

• Tougher scrutiny of vertical deals: Agencies are more willing to block vertical mergers that create or strengthen bottlenecks (especially where digital platforms and recommendation algorithms are central).
• Preference for structural remedies: Following high‑profile merger rejections and careful remedies in the tech space, enforcers favor divestitures over behavioral micro‑management.
• Attention to AI and algorithmic effects: Ownership of AI content tools, training data, and recommendation systems is now a measurable source of competitive advantage and a likely agency concern.

Practical advice for deal teams and counsel

For anyone advising or studying a large media merger today, follow these pragmatic steps to reduce legal risk and improve the odds of approval:

1. Do a pre‑merger risk map: quantify HHI impacts in multiple plausible markets (theatrical, SVOD, AVOD, licensing) and identify likely foreclosure theories.
2. Engage early with enforcers: use pre‑merger calls and voluntary data offers to surface issues and show good faith commitments to remedies.
3. Prepare credible structural remedies: identify viable buyers for any divestiture assets (e.g., theaters, streaming platforms, content libraries) and model post‑divestiture market competition.
4. Address algorithmic risks: document how recommendation systems, feed ranking, and AI content tools will be operated post‑close; propose ex ante audits or transparency where feasible.
5. Build pro‑competitive commitments: offer licensing guarantees for critical content windows or non‑exclusive licensing where that materially preserves downstream competition.

Actionable takeaways for students, teachers, and researchers

If you’re using the Paramount‑Warner hypothetical as a case study or classroom prompt, here are concrete actions:

• Compute a hypothetical HHI for the top studios in theatrical release and SVOD. Use 2019–2025 box office and streaming subscriber data to populate market shares.
• Draft two enforcement briefs: (A) a merger defense mapping efficiencies and pro‑competitive rationales; (B) a government complaint emphasizing foreclosure and algorithmic demotion risks.
• Compare historical remedies (Paramount divestitures) with modern settlements: how have remedies' scope and enforcement mechanisms changed?

Classroom example: A simple economic model

Set up a two‑period model where the merged firm can choose to withhold a blockbuster title from rival streamer A, allocate it to its own platform, or license it. Calculate (1) short‑run revenue gains from exclusive streaming, (2) long‑run loss in rival investment and competition, and (3) consumer surplus effects. This exercise makes the foreclosure theory concrete and helps students understand why structural remedies may be required.

Limitations and open questions

No analysis is definitive without real transaction documents and market data. Key issues that would shape any real enforcement decision include:

• Precise ownership structure post‑deal: is the merger purely horizontal (two studios) or also vertical (studio + streaming/exhibition)?
• Degree of substitution between theatrical and streaming consumption in 2026 — a shifting landscape influenced by post‑pandemic behaviors and technological change.
• Evidence on likely foreclosure: whether rivals can secure content through alternative licensing, vertical separation, or counter‑strategies.

Why historians and antitrust scholars still study Paramount

The Paramount cases are an enduring laboratory for questions that keep surfacing in media markets: how vertical integration changes incentives, when ownership of distribution requires structural cures, and how contractual practices (like block booking) can exclude rivals. In the 2020s, those same themes resurface with new elements — algorithms, data monopoly, and AI — but the core economic logics remain consistent with the Paramount era.

Conclusion: What a modern antitrust system would likely do

Reimagining a 1929 Paramount‑Warner consolidation in 2026 shows that U.S. antitrust law remains capable of addressing combined horizontal and vertical risks. Agencies would probably block the deal unless the parties offered credible structural solutions such as divestiture of distribution platforms or enforceable long‑term licensing commitments. The legacy of United States v. Paramount continues to shape remedy thinking: when distribution control creates the power to exclude, structural fixes work best.

Call to action

If you teach or research competition law, turn this analysis into a seminar module: model HHI calculations, draft complaint language, and simulate a consent decree negotiation. For ongoing, plain‑language case summaries and primary documents (Paramount rulings, modern merger filings, DOJ/FTC guidance), subscribe to our weekly digest at justices.page — and download our student worksheet that walks you through a merger review from HSR filing to remedy negotiation.

Related Reading

• Demystifying Platform Deals: What Podcasters Should Know Before Signing With YouTube or Major Platforms
• The Ethics of Fan Content: When Nintendo Says Delete
• How Small-Batch DIY Brands Make the Softest Pajamas: Lessons from Craft Food Startups
• How to Host Viral Apartment Tours Using Bluesky Live and Twitch
• Body Care Elevated: How to Choose Luxury Body Moisturizers and Scents from Uni, EOS and Phlur