Paramount’s $110 billion acquisition of Warner Bros. receives conditional approval in Europe, but faces obstacles in the U.S
Paramount's Skydance acquisition of Warner Bros. Discovery for $110 billion received EU antitrust approval on Wednesday, but the deal still faces multiple obstacles in the United States including court injunctions and Writers Guild litigation. EU Conditional Clearance As the EU’s antitrust enforcement agency, the European Commission has conditionally approved the Paramount-Warner Bros. deal.
Paramount's Skydance acquisition of Warner Bros. Discovery for $110 billion received EU antitrust approval on Wednesday, but the deal still faces multiple obstacles in the United States including court injunctions and Writers Guild litigation. The European Commission, the EU's antitrust enforcement agency, conditionally approved the Paramount-Warner Bros. deal. The prerequisite is that Paramount promises to terminate United International Pictures, its European film distribution joint venture with Universal Pictures, and the termination time is limited to 13 months after the completion of the transaction. In addition, Paramount also promised not to cooperate with Universal in any film distribution in Europe in the next 10 years, and will not transfer Warner Bros.'s theatrical films to its own distributors. The European Commission stated: “These commitments fully address the Commission’s competition concerns and ensure that films from the combined entity will not be co-released with films from Universal or Disney.” The deal faces more serious difficulties in the United States. Although the U.S. Justice Department has approved the deal, a coalition of 12 states led by California sued on the grounds that the merger would harm competition. Last week, a U.S. court ordered Paramount to suspend trading. If the deal is dragged out by legal proceedings, Paramount will face heavy financial costs. According to the terms of the agreement, if the merger is not completed by September 30, Paramount must pay Warner shareholders a "delayed completion compensation fee" of US$0.25 per share. This is equivalent to an additional payment of approximately US$7 million for every day of delay. At the same time, the Writers Guild of America also filed a lawsuit against the deal, saying it would jeopardize the livelihood of writers and pose a threat to the overall health of the American entertainment industry. British regulators may become another "stumbling block." Britain said last month it would not rule out intervention given the potential impact the deal could have on news, children's TV programs and streaming services.