The Battle for Warner Bros. Discovery: A Regulatory Showdown Looms in Europe
The fight for control of Warner Bros. Discovery (WBD) between Netflix and Paramount, spearheaded by David Ellison, is escalating beyond a U.S. Bidding war. Regulatory scrutiny in Europe, particularly from the European Union’s Directorate-General for Competition, is poised to become a pivotal factor in determining the outcome. “Pre-notification discussions” are already underway within the EU, even before a deal is finalized in the United States.
Ellison’s European Offensive
David Ellison has been actively lobbying European officials, making a case for Paramount Skydance. His efforts included meetings with members of the EU’s Directorate-General for Competition, French President Emmanuel Macron, and officials in Germany and the U.K. He likewise published an open letter in newspapers worldwide, promising at least 30 theatrical film releases annually if Paramount Skydance acquires WBD, framing the potential merger as a defense of cinematic experiences.
Netflix’s Established European Presence
Even as Ellison is making inroads, Netflix already has a strong relationship with European regulators. The streaming giant has a “well-oiled machine” for lobbying in Europe, stemming from prior engagement with the EU’s Audiovisual Media Services Directive, which requires streamers to invest in local productions. Netflix has largely complied with these regulations.
Consumer Concerns and the Threat to Theaters
European regulators are particularly sensitive to potential impacts on consumer prices. A merger between Netflix and WBD raises concerns about increased subscription costs, especially if Netflix were to combine Netflix and HBO Max. The potential impact on the theatrical business is also a key consideration. Paramount’s position is seen as more favorable as Ellison has explicitly committed to supporting theatrical releases.
The Role of the International Union of Cinemas (UNIC)
The International Union of Cinemas (UNIC) has met with the EU’s Directorate-General for Competition, emphasizing the importance of protecting theatrical release windows. However, UNIC has not endorsed either bid, acknowledging that both mergers could negatively impact European cinema. German producer Martin Moskowicz echoes this sentiment, stating that neither deal is “good for business.”
A Slight Edge for Paramount?
Experts suggest Paramount may have a slight advantage with European regulators. Max von Thun, director of Europe at the Open Markets Institute, believes a Netflix deal could face hurdles due to its more significant impact on consumers. Martin Moskowicz notes that Netflix’s existing investment in European production and established industry relationships could give it an edge, but believes Netflix can reassure regulators about its commitment to theatrical releases.
EU Regulatory History and Potential Outcomes
Historically, the EU rarely blocks media mergers. Previous examples include Disney-21st Century Fox, Comcast’s bid for Sky, and the WarnerMedia-Discovery merger. A complete blockage is unlikely. However, the EU could impose conditions or request assurances from the winning bidder. The biggest impact could be a delay in approval.
The Geopolitical Dimension
The regulatory decision isn’t solely based on antitrust concerns. Geopolitical factors, including the potential reaction from the U.S. Administration, are also at play. The decision rests with the EU’s antitrust chief, Teresa Ribeira, who has recently levied substantial fines against major tech companies.
Did you understand?
EU regulators are particularly focused on the potential impact of mergers on consumer prices and the preservation of the theatrical experience.
FAQ
- Will the EU block the Netflix-WBD deal?
- What is Paramount’s strategy in Europe?
- Why is the theatrical market a key concern?
A complete blockage is unlikely, but the EU could impose conditions or delay approval.
David Ellison is actively lobbying European officials and emphasizing Paramount’s commitment to theatrical releases.
Regulators are concerned that a Netflix merger could diminish support for movie theaters.
Pro Tip: Keep an eye on statements from the EU’s Directorate-General for Competition for the latest developments in the regulatory review process.
Stay informed about the evolving media landscape. Explore our other articles on media mergers and acquisitions and the future of streaming.
