EU approves Paramount-Warner Bros merger amid distribution conditions
The European Commission has granted conditional approval for Paramount Global’s acquisition of Warner Bros. Discovery, mandating the divestment of its joint distribution business with Universal Pictures to preserve market competition.
The European Commission has approved Paramount Global’s proposed $111 billion acquisition of Warner Bros. Discovery, subject to strict conditions designed to mitigate risks to fair market competition. Regulators determined that the existing joint distribution venture between Paramount and Universal, known as Universal International Pictures (UIP), posed the most significant threat to competitive balance in the European film market.
To secure regulatory clearance, Paramount has committed to withdrawing from its joint distribution business within 13 months of the transaction closing. Furthermore, the company has agreed to refrain from directly or indirectly co-distributing films with Universal for a period of ten years. The European Commission stated that without these commitments, the merger would have resulted in less favourable rental and distribution terms for cinema operators, ultimately disadvantaging consumers.
The regulatory assessment focused on how the merger would impact film production, distribution, media licensing, and television broadcasting. Authorities concluded that combining Warner Bros’ film portfolio with the existing UIP arrangement would have granted Paramount an unfair competitive advantage. The mandated separation aims to ensure that cinema operators retain bargaining power and that consumer access to content remains competitive.
While the European Commission and US federal regulators have cleared the merger, the transaction faces a temporary legal pause in the United States. A lawsuit filed by 12 states has challenged the deal on competition grounds, with a US judge placing a two-week pause on the merger on July 20. A hearing is scheduled for August 3 to determine whether the legal challenge requires a full trial.
Outside of the EU and US, UK regulators are currently scrutinising the transaction and have signalled a willingness to intervene. The deal faces a critical deadline at the end of September; if the acquisition does not close by this date, Paramount faces a financial penalty of approximately $7 million per day.
