EU clears Paramount-Warner $110B merger as US legal challenge continues

The European Commission approved Paramount Skydance’s proposed $110 billion acquisition of Warner Bros. Discovery on Wednesday after the company offered measures to address competition concerns in European film distribution.

To secure approval, Paramount agreed to withdraw from United International Pictures, its European film distribution joint venture with Universal Pictures, within 13 months of the transaction’s completion.

The company also committed not to enter into any new film distribution arrangement with Universal in Europe for the next 10 years.

The Commission said the concessions would prevent films belonging to the combined Paramount-Warner company from being distributed alongside those produced by major competitors, including Universal or Disney, addressing the regulator’s competition concerns.

The decision represents a significant regulatory step for the proposed merger, which would bring together two major Hollywood studios, the HBO Max and Paramount+ streaming platforms and a large portfolio of television networks.

Paramount said regulators and governments covering 65 jurisdictions had now either approved the transaction or decided not to challenge it on competition or foreign investment grounds.

The company argued that the merger would create a larger entertainment business capable of competing more effectively with technology companies while increasing investment in film and television production.

Paramount shares gained approximately 2% in afternoon trading following the announcement.

The transaction has already received clearance from the US Justice Department but continues to face a separate legal challenge brought by a coalition of US state attorneys general.

The coalition, led by California Attorney General Rob Bonta, sued last week to block the acquisition, arguing that it would reduce competition by combining Paramount and Warner Bros., their streaming platforms and their extensive pay-television operations.

A federal judge in California subsequently issued a temporary restraining order, pausing the transaction for 14 days while the states’ claims are considered.

Paramount said the European Commission’s findings undermined central arguments raised by the states in their lawsuit.

Despite the US court challenge, the company said it remained on course to complete the acquisition by the end of September.