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European Union competition enforcers have signed off on Paramount’s $111 billion bid for Warner Bros. Discovery, another major approval as the company battles a legal challenge from a 12-nation consortium.
The European Commission sealed the deal on Wednesday after Paramount agreed to pull out of United International Pictures, its film distribution joint venture with Universal Pictures. The studio also said it would not enter into any film distribution deal with Universal for the next 10 years.
“These commitments fully address the competition concerns identified by the Commission by ensuring that the combined entity’s films are not jointly distributed with Universal or Disney films,” the commission’s statement said.
The green light comes days after a federal judge in California temporarily blocked Paramount from closing the deal. The court will consider next month whether the deal should be frozen until the case is decided, putting the studio at risk of having to pay hefty fines to Warners shareholders. In June, the Justice Department approved the deal without any concessions.
The Commission investigated the impact of the takeover on the production and distribution of films for EU theatrical release, as well as the supply and licensing of content.
At the production level, the panel found there was sufficient competition from competitors, including Disney, NBCUniversal, Sony and Amazon MGM. But on a distribution level, the report concluded that there will be “higher concentration” and “increased transparency” in countries where Paramount has a partnership with Universal due to the addition of Warners’ film portfolio. The deal would have resulted in Warners films being distributed through United International Pictures.
Without Paramount’s commitment to securing approval for the deal, movie theater operators would have faced worse leasing and distribution terms. There are also other commitments from the studio related to theatrical distribution in the region.
Paramount must divest its interest in UIP within 13 months of the deal closing.
“Not only does this combination pose no competitive disadvantage, it enhances competition by creating a broad-based media and entertainment company with the ability to challenge the technology platforms that have come to dominate the industry,” Makan Delrahim, Paramount’s chief legal officer, said in a statement. “By enhancing competition, it will support increased investment in content, expand opportunities for creators and offer greater choice to consumers.”
So far, antitrust authorities in more than a dozen countries have approved the deal. Regulators examining foreign investments from Gulf sovereign wealth funds in Germany, Italy, France, Romania, Slovenia, Belgium, Czechia, New Zealand and Spain also approved the merger.
