The proposed merger between Paramount and Warner Bros. Discovery, valued at $110 billion, is set to encounter a rigorous review process in Europe after receiving initial support in the United States. While Washington appears poised to approve the deal, the European Union (EU) and U.K. regulators are expected to conduct a more detailed examination, potentially delaying the transaction rather than preventing it outright.
In January, David Ellison, CEO of Paramount, embarked on a diplomatic campaign across Europe, engaging with key political figures and entertainment leaders, including French President Emmanuel Macron. His aim was to garner support for the merger and mitigate potential regulatory hurdles that could arise during the review process.
Once the U.S. regulators complete their evaluation, the EU and U.K. antitrust authorities will begin their analysis of the merger’s implications across various sectors, including cinema distribution, cable television, and streaming services. The EU has the authority to thoroughly assess the competitive impact of the merger among its 27 member states.
This merger is not merely a studio consolidation; it combines multiple networks and subscription video-on-demand (SVOD) services. On the Warner side, it includes HBO Max and Discovery+, while Paramount brings its own platforms, such as Paramount+ and SkyShowtime, a joint venture with Comcast. According to Alice Enders of Enders Analysis, the complexity of the merger, which encompasses multiple layers of the television market, makes the outcome of the regulatory review challenging.
Despite this complexity, many industry observers do not expect significant resistance concerning theatrical releases or streaming services. European cinema owners have publicly expressed support for the merger, indicating a preference for the combined entity over a hypothetical scenario where Netflix acquires Warner. Even when merged, Paramount and Warner’s streaming platforms would still hold a smaller market share in Europe compared to giants like Netflix and Amazon.
Enders noted that she does not foresee the SVOD market posing issues, as both HBO Max and Paramount+ are relatively new entrants in a market dominated by established players. Instead, the most contentious aspects are likely to involve traditional television operations. The merger encompasses a range of branded channels, including Cartoon Network, Eurosport, Nickelodeon, MTV, and Comedy Central, along with other assets like TVN Group, a major Polish broadcaster owned by Warner Bros. Discovery.
The operational differences of these channels across territories further complicate matters. For instance, Comedy Central is available as a free-to-air channel in Germany but operates as a licensed pay-TV channel in Spain, where it is distributed through platforms such as Movistar+, Vodafone TV, and Orange TV. The intricate web of licensing agreements between Warner and Paramount for individual shows will require careful untangling by regulators.
As Enders pointed out, the EU’s review process is lengthy due to the complexities of 27 national markets and numerous trade bodies. Previous media mergers have revealed that EU officials typically focus on specific overlaps concerning channels, sports rights, or cable bundling when assessing competition. In the case of Disney‘s acquisition of 21st Century Fox in 2019, approval was granted only after Disney agreed to divest several European channels that overlapped with Fox’s services.
For Paramount, securing EU approval may entail divesting some of its smaller channels or brands. While the U.K. review may be more straightforward, as Paramount can argue that the merger will not drastically alter the competitive landscape, the financing aspect of the deal may invoke scrutiny. The merger is supported by significant investments from Middle Eastern sovereign wealth funds, including Saudi Arabia’s Public Investment Fund and the Qatar Investment Authority, which could raise additional regulatory questions.
Paramount’s primary argument is that the merger poses less of a competitive threat than a previous attempt by Netflix to acquire Warner’s film and streaming assets, as a combined Paramount-Warner would hold less than 20 percent market share in individual European markets. The company is expected to file for formal EU approval in the coming months, initiating a 25-working-day preliminary review that could be extended if remedies are proposed.
Should the European Commission trigger a Phase II investigation, the process may prolong the timeline for approval, putting pressure on Paramount’s goal to finalize the merger within the next 12 months. The average length for a Phase II investigation in 2025 was reported at over 15 months. Despite these potential delays, past media mergers have been approved more swiftly; for example, the Disney-Fox merger received final approval in under two months, while Amazon’s acquisition of MGM was greenlighted in less than five weeks.
As the regulatory landscape unfolds, it remains clear that while David Ellison may face delays, the likelihood of the EU rejecting the merger is low. The pressing question now is how long it will take to navigate the complexities and ultimately secure approval.
