EU clears Paramount's $110bn Warner Bros bid with conditions, US court pause looms
Brussels approved the $110 billion deal on Wednesday, requiring Paramount to exit its film distribution venture with Universal within 13 months, as a US judge temporarily blocked the merger.
EU approval with strings attached
The European Commission cleared Paramount Skydance's acquisition of Warner Bros Discovery on Wednesday, conditional on Paramount exiting its film distribution joint venture with Universal Pictures. The company must withdraw from United International Pictures (UIP) within 13 months of the deal closing and is barred from any co-distribution agreement with Universal in the European Economic Area for ten years. Regulators found that film production would remain competitive, citing rivals like Disney, NBCUniversal, Sony and Amazon MGM, but warned that combining Warner's catalogue with UIP would have led to worse rental terms for cinema operators and ultimately harmed consumers. Paramount also cannot transfer distribution of Warner films to its own distributor if that distributor already handles Universal or Disney titles in the same European countries.
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.
An independent trustee will monitor implementation. The approval removes one obstacle, though the deal still faces challenges elsewhere.
US legal roadblock
On Monday, a federal judge in California granted a temporary restraining order that pauses the merger for 14 days, responding to a lawsuit from 12 states led by California Attorney General Rob Bonta. The states argue the transaction violates antitrust laws and would irreparably harm competition. A hearing on a preliminary injunction is set for August 3, which could freeze the deal until a full trial. The US Department of Justice had already cleared the merger without conditions in June.
- US federal judge grants temporary restraining order, pausing merger for 14 days
- European Commission conditionally approves the deal
- US court hearing on preliminary injunction
- Deadline after which Paramount owes ticking fee to Warner shareholders
The ticking clock
Paramount faces mounting financial pressure if the deal does not close by September 30. Under a "ticking fee" arrangement, the company must pay Warner Bros Discovery shareholders roughly $7 million per day (or about $650 million per quarter) for each day the merger is delayed past that date. The temporary pause and potential injunction threaten to push the timeline beyond that threshold.
Other regulatory and legal hurdles
The UK's competition authority has signalled it may intervene, citing potential impacts on news, children's television and streaming services. The Writers Guild of America has also sued to block the merger, arguing it would jeopardise writers' livelihoods and the health of US entertainment. Antitrust enforcers in over a dozen other countries have already cleared the deal.
Political undercurrents
US President Donald Trump has expressed interest in the merger's effect on CNN, a network he frequently criticises. Paramount CEO David Ellison is the son of Oracle co-founder Larry Ellison, a close Trump ally. The combined entity would control CNN, Warner Bros Pictures, HBO Max, TNT Sports and other assets, making it one of the largest media conglomerates.
