EU Set to Clear Paramount-Warner Bros. Discovery Merger After Antitrust Concessions

Deadline first reported that European regulators were preparing to clear the deal, which would combine some of the world’s largest entertainment and media assets under a single company. According to Deadline, discussions between the companies and the European Commission focused on commitments designed to alleviate competition concerns identified during the review process.

As part of those efforts, Paramount is prepared to sell its international film distribution joint venture with Universal Pictures, Reuters reported, citing a source familiar with the matter. The proposed divestiture is intended to address concerns about competition in film distribution markets and follows discussions with European Commission officials overseeing the merger review.

The transaction, valued at roughly $110 billion, would bring together a vast portfolio of assets including Paramount Pictures, CBS, HBO, CNN, Warner Bros. studios and a range of cable television networks and streaming services. The scale of the proposed combination has drawn scrutiny from regulators examining whether the merger could increase market concentration across media, entertainment and content distribution businesses.

Under the European Union’s merger review framework, regulators assess whether proposed transactions could significantly impede competition, reduce consumer choice or strengthen a company’s market power. The European Commission launched its review after Paramount formally sought approval for the acquisition earlier this month, with an initial deadline set for early July.

Competition authorities have paid particular attention to the companies’ content libraries, film distribution operations and streaming platforms. The merger would combine some of the industry’s most recognizable brands and intellectual property portfolios, potentially increasing the company’s leverage in negotiations with distributors, advertisers and other business partners. European regulators have also examined whether the deal could affect competition in content licensing and direct-to-consumer streaming markets.

Related: China Grants Antitrust Approval for Paramount-Warner Bros. Discovery Deal

The proposed sale of the international distribution venture is viewed as a key step toward resolving those concerns. Reuters reported that formally submitting the remedy package could extend the review timeline while regulators evaluate whether the commitments sufficiently address competitive issues identified during the investigation.

The European review is one of the final major regulatory hurdles facing the transaction. Reuters reported that the U.S. Department of Justice cleared the acquisition last week, concluding that the merger was unlikely to substantially lessen competition. The deal has also secured approvals in China and several other jurisdictions, bringing the companies closer to completing the transaction.

At the same time, the merger continues to face scrutiny beyond traditional antitrust reviews. Reuters reported that European officials are separately examining the transaction under the EU Foreign Subsidies Regulation because financing for the deal includes backing from Middle Eastern investment entities. The companies are reportedly expected to receive approval in that proceeding as well.

Despite the progress made with international regulators, the deal could still face legal challenges in the United States. Reuters reported that a group of state attorneys general, including officials in California and New York, are preparing litigation aimed at blocking the merger, arguing that the combination could harm competition in segments of the media and entertainment industry.

Source: Deadline