European Union gives its greenlight to Paramount and Warners mega merger with some conditions

NEW YORK (AP) — European Union approves Paramount Warner Bros. Acquisition of Discovery for $81 billion This week, we effectively cleared another regulatory hurdle to a mega-merger that could dramatically reshape the entertainment and media landscape around the world.

But the green light comes with certain conditions.

The European Commission, which acts as the EU’s antitrust enforcer, said even with the Paramount-Warner combination there would be enough competitors in the 27-nation bloc in markets such as film production and streaming. Yet when it comes to distributing films to movie theaters, the Commission warned that high concentration “could lead to worse rental and distribution conditions for cinema operators and ultimately disadvantage consumers.”

To resolve this issue, the commission said, Paramount, which owns Skydance, agreed to terminate its European Economic Area stake in United International Pictures, a long-running venture with Universal, another major studio that Paramount uses to distribute movies in theaters outside North America. The commission said the company must end that partnership within 13 months of completing the Warner acquisition and must not enter into any new deals with Universal for the next 10 years.

Among other conditions, the current distribution of Warner films must be shifted to the same channel that Paramount uses in these European countries. The European Commission said its approval was based on the company’s commitments and would monitor their implementation, without expanding further on how they would be implemented.

Paramount welcomed the green light, which it said was a “major milestone” towards completing AB’s acquisition. In a statement Wednesday, the company added that such clearances reflect how the Paramount-Warner combination will “increase consumer choice” and create a business of scale that “can compete with the technology companies that dominate the industry.”

Universal did not respond Wednesday to a request for comment about Paramount’s new film distribution commitments in Europe.

Paramount-Warner merger means HBO Max launches fan favorites “Harry Potter” and even CNN CBS is under the same umbrella as “Top Gun” and the Paramount streaming service. Beyond film and streaming, both American companies also own a handful of Europe-based TV assets, including Warner’s TVN Group in Poland, as well as localized channels for flagship Paramount brands like MTV and Nickelodeon.

The EU’s approval marks the latest in a string of regulatory clearances that are inching closer to making the merger a reality, but the deal faces other challenges. A federal judge in the US on Monday ordered companies to pause their operations for a while. at least two weeks.

This involves a lawsuit filed by California and 11 other states. To completely block the Paramount and Warner merger – on the grounds that such a merger would “eliminate competition” from Hollywood and lead to fewer choices for consumers, especially moviegoers and cable customers in the US

Paramount said the states’ claims were unfounded. The company reiterated that on Wednesday, saying the findings from the EU’s approval “directly refute the underlying assumptions underpinning the state AGs’ complaint,” particularly when it comes to competition from new or smaller film studios.

Either way, the deal will be stalled at least until an injunction hearing scheduled for Aug. 3. temporary restraining order Earlier this week, U.S. District Judge Araceli Martínez-Olguín said the states made a strong case for the Paramount-Warner merger’s potential to “significantly lessen competition” and that the merger would be “difficult, if not impossible” without a break.

Contrary to the states’ situation, the Trump administration’s U.S. Department of Justice said: does not prevent the agreement — and instead issued a lengthy statement supporting that pursuing the Paramount-Warner combination would bring “benefits for American consumers and workers.”

Paramount also says it has received regulatory approvals from countries such as Australia, China and Canada. Other reviews are ongoing, including one from the United Kingdom, which separately suggests it may intervene.

The clock is ticking. The company has promised to begin paying Warner shareholders additional “signage” compensation of about $7 million per day if the deal is not completed by September 30.

Including debt, Paramount’s offer to acquire Warner is valued at approximately $111 billion based on outstanding shares.

Beyond central antitrust investigations, regulators in Europe have also effectively approved Paramount’s billions of dollars in financial support from three Gulf countries: Saudi Arabia, Qatar and the United Arab Emirates. In regulatory filings, Paramount argued that these government funds would not have any voting rights. Still, critics have raised alarm about what their money could mean for behind-the-scenes influence.