Paramount Skydance’s $111bn acquisition of Warner Bros Discovery has been approved by the US Department of Justice, clearing a major hurdle for a deal that would reshape the media landscape.

The approval allows the takeover bid to move forward, although the sale is not yet complete. California and other states are still reviewing the transaction and could attempt to block it.

In a statement, the Justice Department said it carried out a “rigorous” investigation and found the deal was “not likely to result in harm to competition or American consumers.” It also said the merger would likely “increase competition across the media and entertainment ecosystem, with benefits for American consumers and workers.”

The deal has faced heavy scrutiny because of fears about consolidation in Hollywood and the political links around Paramount’s leadership.

Opposition to the merger has also come from California Attorney General Rob Bonta, who said in February he was concerned the takeover could further reduce competition in an entertainment industry already hit by layoffs and cuts. Earlier this month, he said he would soon decide whether to take formal legal action, while a spokesperson said the review remains under investigation.

If completed, the takeover would make Paramount one of the most powerful companies in Hollywood, adding CNN, HBO, TBS, TNT, TCM, DC Studios and New Line Cinema to its existing assets, which include Paramount Pictures, CBS, Showtime and Nickelodeon. The merger comes after Skydance combined with Paramount in 2025 and cut about 10% of its workforce, while more than 1,400 Hollywood actors, directors and filmmakers signed an open letter opposing the deal over fears of fewer jobs, fewer opportunities and less choice for audiences.