Paramount Skydance's £80bn takeover of Warner Brothers moved a step closer after receiving conditional approval from the European Commission. The commission stated that Paramount's offer to end a film distribution joint venture with Universal Pictures addressed competition concerns.
EU Approval Conditions
As part of its commitments in the EU, Paramount has 13 months from the closing date to exit the joint venture. The European Commission said, "These commitments fully address the competition concerns identified by the commission by ensuring that the films of the merged entity will not be distributed jointly with those of Universal or Disney." Additionally, Paramount must not "enter into any agreement or understanding with Universal to jointly co-distribute films in the EEA" for 10 years.
Paramount signed the takeover deal in February after outbidding Netflix in a competitive auction. The combined company would control major media assets including CNN, Warner Brothers Pictures, TNT Sports, and HBO Max.
US Legal Challenges
Despite EU approval, the transaction faces significant obstacles in the United States. A US court ordered Paramount Skydance to pause the deal last week, despite clearance from the US Department of Justice. A coalition of 12 states led by California argued the merger would irreparably harm competition. President Donald Trump has expressed interest in the merger's impact on CNN, a network he often criticizes. Paramount CEO David Ellison is the son of Oracle co-founder Larry Ellison, a close ally of Trump.
A hearing on a preliminary injunction is scheduled for 3 August, which could prevent the deal from closing before a final decision. If the merger is delayed past 30 September, Paramount is liable to pay Warner Brothers shareholders approximately £5m per day.
Additional Hurdles
The deal is also the subject of a lawsuit by the Writers Guild of America, which claims it would jeopardize writers' livelihoods and threaten the health of US entertainment. In the UK, culture secretary Lisa Nandy indicated potential intervention due to the impact on news, children's television, and streaming services. "Following engagement with the parties and independent research, my department has today written to the current and proposed owners of Warner Bros Discovery on my behalf to inform them that I am minded to intervene," she said in a written ministerial statement.
