EU Approves Paramount’s Acquisition of Warner Bros. Discovery

On Wednesday, regulators in the European Union gave the nod to Paramount’s massive $110 billion acquisition of Warner Bros. Discovery. This decision, while a significant step forward, comes amidst ongoing challenges in the U.S. market.

Paramount, under pressure to finalize the deal, made several concessions. The European Commission stated that their approval hinges on “full compliance with the commitments put forward by Paramount.”

One major commitment from Paramount involves divesting its stake in Universal Pictures’ film distribution arm, United International Pictures, within 13 months. This deal is set to wrap up this fall.

The agreement also ensures no co-distribution of films in shared regions, including EU member countries and three others, for a decade, specifically with NBCUniversal, which owns Universal Pictures.

The EU expressed confidence that the existing number of studios would prevent any significant harm to competition, acknowledging that their primary concerns over film distribution were alleviated by Paramount’s assurances.

Meanwhile, the deal has also gained approval from the Justice Department during the Trump administration, but it is still encountering significant obstacles.

Recently, a judge issued a temporary injunction against the merger following a lawsuit from 12 Democratic state attorneys general led by California. They raised antitrust concerns, prompting U.S. District Judge Araceli Martinez Holguin—appointed by Biden—to halt the deal for 14 days. A hearing on the matter is set for August 3.

While executives at Paramount and Warner Bros. were somewhat prepared for this pause, there is real urgency to finalize arrangements by a critical September deadline.

If the acquisition isn’t completed by October 1, it could incur a substantial “ticking fee” of 25 cents per share for every quarter the deal is delayed, translating to a staggering $7 million loss per day.

This merger aims to consolidate major platforms like HBO Max, Paramount+, HBO, CBS, CNN, and countless film titles under a singular entity led by David Ellison, son of Oracle founder Larry Ellison, who is also a Trump supporter.

Critics, including voices from the film industry such as the SAG-AFTRA union, argue that this merger might lessen competition and result in higher prices for consumers.

The lawsuit filed on July 13 claims that the new conglomerate would dominate nearly one-third of the U.S. theatrical distribution market and a similar portion of basic cable programming.

Despite the pushback, Paramount continues to defend the merger, determined to meet its September deadline.

Across the pond in the UK, Culture Secretary Lisa Nandy has already warned both companies of potential intervention in this deal.

Additionally, the Ellisons are facing scrutiny from Paramount shareholders who believe there were under-the-table agreements with Trump to secure regulatory approval.

If the deal goes through, the Ellisons would gain control over CNN, a network that has frequently been at the receiving end of Trump’s criticisms regarding perceived bias against Republicans.

There are reports that CNN’s top reporters are beginning to feel uneasy about the future autonomy of the network, especially after David Ellison appointed Bari Weiss to oversee CBS News post-acquisition.