Regulators in Europe this week granted Paramount a long-awaited approval for its acquisition of Warner Bros Discovery (WBD), though the green light came with some conditions attached.
The European Commission said Wednesday that Paramount will divest its stake in a European joint venture involving United International Pictures within 13 months. Paramount also agreed not to enter into a similar film distribution agreement with Universal for 10 years.
Regulators said the commitments resolve concerns that the combined company could coordinate theatrical distribution with major competitors, reducing competition across European cinema markets.
“These commitments fully address the competition concerns identified by the commission,” the agency said in a statement.
The clearance is a significant step forward for the transaction, which aims to combine Paramount’s film and television assets with that of Warner Bros Discovery, bringing well-known brands like Nickelodeon, MTV, CBS, British broadcaster Channel 5, Network 10 in Australia, Cartoon Network, Eurosport, TBS, TNT, CNN, Paramount Plus, Paramount Pictures, Warner Bros Studios and HBO Max under a single owner.
The combination is intended to help Paramount and WBD better compete against technology companies that have expanded into entertainment, streaming and advertising. The two companies say the transaction will not create a media behemoth that outpaces the likes of Disney, Google’s YouTube, Amazon’s Prime Video or Netflix.
Regulators and governments from 65 jurisdictions have either approved the merger or declined to challenge it on competition or foreign investment grounds, Paramount said this week. The transaction previously received a go-ahead from the U.S. Department of Justice, but faces legal roadblocks in California and a number of other states.
Earlier this month, California Attorney General Rob Bonta and attorneys general from 11 other states filed a lawsuit seeking to block the merger on antitrust grounds, arguing the deal has the likelihood of reducing competition in theatrical film distribution and basic cable programming. A federal judge in California subsequently issued a temporary restraining order preventing Paramount from closing the deal for 14 days while the court considers the states’ claims.
The Writers Guild of America has also opposed the acquisition, arguing the combined company would gain greater leverage over writers, employment opportunities and compensation.
Regulatory review remains underway in the United Kingdom, where authorities are considering competition and public-interest questions involving streaming, children’s programming and local news. The United Kingdom formally withdrew from the European Union in early 2021 following a referendum five years earlier, so the deal’s approval by European Union regulators is not binding on their British counterparts.
Paramount said the legal challenge and further regulatory scrutiny has not derailed its plans to close on the transaction by the end of September. If it doesn’t, Paramount is liable for a quarterly missed deadline payment that is due to WBD’s shareholders, which could exceed $650 million for every three-month period beyond that deadline.
