The European Union’s antitrust authority has approved Paramount’s $110 billion acquisition of Warner Bros. Discovery, marking a significant step forward for the media mega-merger. The European Commission’s decision, announced Wednesday, is conditional upon Paramount fulfilling specific commitments to address concerns regarding film distribution competition within the European Economic Area (EEA).
EU Regulators Approve Paramount-Warner Bros. Discovery Merger
According to Deadline, the European Commission concluded that the merger did not pose undue pressure on film production or audiovisual channels, noting that sufficient competition exists among film studios in the region. However, regulators identified competitive risks related to Paramount’s structural partnership with Universal Pictures, known as United International Pictures (UIP). The Commission found that integrating Warner Bros.’ film portfolio into the UIP venture would have resulted in high concentration and potentially disadvantageous rental and distribution terms for cinema operators.
Commitments and Regulatory Remedies
To secure the greenlight, Paramount has agreed to several legally binding remedies. The company must terminate its stake in the UIP joint venture in the EEA within 13 months of the deal’s closing. Additionally, for a period of ten years, Paramount is prohibited from entering into any agreement or understanding with Universal to jointly co-distribute films in the region.
For more on this story, see FCC Officials Accepted Gifts from Paramount During Merger Review.
The Commission also stipulated that Paramount cannot shift the distribution of Warner Bros. films to any theatrical distributor used by Paramount if that distributor also handles films for Universal or Disney in UIP-operating countries. The implementation of these commitments will be monitored by an independent trustee under the supervision of the Commission.
Domestic Legal Challenges in the U.S.
While the merger has secured approval from the U.S. Department of Justice, it faces a significant hurdle in the United States. On July 20, a federal judge issued a temporary restraining order, barring Paramount from closing the deal for 14 days. This follows a lawsuit filed by a coalition of 12 state attorneys general, led by California, who argue the merger threatens market competition.
As reported by the nypost.com, U.S. District Judge Araceli Martínez-Olguín has scheduled a hearing for August 3 to address the states’ motion for a preliminary injunction. The plaintiffs contend that the combined entity would control nearly one-third of the U.S. theatrical film distribution market and one-third of basic cable programming.
Financial Stakes and Global Scrutiny
The pressure to finalize the transaction is intensified by a looming deadline. Paramount aims to close the deal by the end of September. If the acquisition is not completed by October 1, a “ticking fee” will take effect, requiring the company to pay approximately $7 million per day to Warner shareholders.
Beyond the U.S. and EU, the deal faces potential intervention in the United Kingdom. Culture Secretary Lisa Nandy has signaled she is minded to intervene
on public interest grounds, citing concerns regarding media plurality and the impact of the merger on streaming and on-demand services, such as Paramount+ and HBO Max. According to Engadget, Paramount maintains that the transaction does not pose media plurality issues in the UK.
This follows our earlier report, Paramount Shareholder Sues Over Alleged Ellison-Trump Deal.
The proposed merger, led by David Ellison, would combine major assets including CBS, CNN, HBO, and thousands of film titles. The acquisition is supported by significant equity financing from Middle Eastern sovereign wealth investors, including the Public Investment Fund of Saudi Arabia, with the Ellison family and RedBird Capital retaining voting control.
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