The Paramount and Warner Bros. deal has received EU approval

European regulatory authorities have approved the agreement for Paramount to acquire Warner Bros. Discovery, but have imposed a condition: Paramount will have to wind down its joint distribution operations with Universal in the region.

Having received the green light from both the European Union and U.S. officials, Paramount is on the verge of finalizing a massive $111 billion acquisition. Currently, the main obstacle to completing the merger remains a lawsuit filed by twelve states, which has temporarily halted the process.

During the review, antitrust authorities analyzed the deal’s potential impact on areas such as film production, film distribution, media content licensing, and television broadcasting. As a result, experts concluded that the greatest threat to fair competition comes from Paramount’s future distribution network. The fact is that in Europe, Paramount, together with Universal, owns Universal International Pictures (UIP). According to regulators, combining this with Warner’s film catalog would give Paramount an undue advantage. Representatives of the European Commission noted that, in the absence of appropriate commitments, Warner’s films would also be distributed through UIP, which would worsen exhibition and distribution conditions for movie theaters and ultimately harm end viewers.

To comply with the regulators’ requirements and obtain their approval, Paramount has committed to exiting the joint distribution business within 13 months of the transaction’s official closing. In addition, over the next decade, the company promises to refrain from any direct or indirect cooperation with Universal regarding the joint distribution of films.

Outside the European Union, Paramount remains under scrutiny by UK regulators, who have already hinted at their readiness to intervene in the deal. Meanwhile, in the United States, although federal authorities have given final approval for the mega-merger, a coalition of 12 states is attempting to halt the process due to competition concerns. On July 20, a judge imposed a temporary two-week hold on the deal and scheduled a hearing for August 3 to determine whether the case warrants a full trial. However, at this point, the lawsuit is viewed more as a temporary setback than an insurmountable obstacle.

Nevertheless, any delays in finalizing the deal could cost Paramount dearly. Bloomberg reports that if the transaction is not closed by the end of September, the company will be forced to pay an estimated $7 million in additional fees for each day of delay.

Paramount is acquiring Warner Bros. Discovery: Europe has given the green light, but there’s a “but”

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