Brussels validates the Paramount-Warner mega-acquisition, provided that competition is preserved in the European cinema market.
The European Union on Wednesday July 22 gave its conditional green light to the acquisition by the American conglomerate Paramount Skydance of the Hollywood studio Warner Bros Discovery (WBD). This mega-acquisition, which values WBD at around $110 billion, including debt, received the anointing from Brussels thanks to commitments made by the buyer to preserve competition in the European cinema market.
Commitments to preserve competition
To obtain the agreement of the European Commission, Paramount promised to withdraw within thirteen months following the acquisition of the international film distribution company UIP (United International Pictures). The group jointly owns this London-based film distributor with its competitor Universal Pictures, which fueled fears for cinema operators. By giving UIP control over the works produced by Warner, in addition to those of Paramount and Universal, the acquisition “would have led to degraded distribution and rental conditions for cinema operators, to the detriment of consumers”, explained the Commission.
The announced withdrawal of Paramount, accompanied by other concessions (such as the refusal to enter into a new agreement with Universal for ten years), made it possible to allay the concerns of the European executive. “These commitments fully resolve the competition problems identified by the Commission, by guaranteeing that the films of the merged group will not be distributed jointly with those of Universal or Disney,” underlines Brussels.
The marriage between Paramount Skydance and Warner Bros Discovery would further concentrate an already small Hollywood studio landscape and also form a portfolio of more than 200 million subscribers to online video services. Under the terms of this acquisition, the new media would combine the assets of Paramount (CBS, “Mission Impossible”, “Star Trek”, “Top Gun”, etc.) and those of Warner (CNN, “Harry Potter”, “DC Comics”, etc.).
It would allow the Ellison family, owner of Paramount Skydance and close to Donald Trump, to control two news channels, CBS News and CNN, two major film studios, Paramount Pictures and Warner Bros, as well as two streaming platforms, Paramount+ and HBO Max.
The American Department of Justice has already given the green light to this merger. The American government considers that the operation should strengthen competition in the field of streaming, where the new group will be able to compete more effectively with the three leaders in the sector which are Netflix, Prime Video (Amazon) and Disney +.
However, the operation remains subject to the consent of the United Kingdom, which could prove more complicated to obtain: the British government, then led by Keir Starmer, announced at the end of June that it could launch a more cumbersome authorization procedure, to ensure that the plurality of media is preserved.
Legal proceedings underway in the United States
Monday, July 20, a federal judge in Oakland (California), seized in summary proceedings (emergency procedure), ordered the suspension of the repurchase, while the case is examined on the merits. Furthermore, a dozen American states, led by California, are challenging this takeover in court, believing that it poses a risk for free competition and consumers.
After five months of a bidding war to acquire Warner Bros. Discovery, Netflix ended up throwing in the towel at the end of February, leaving the field open to Paramount Skydance.
