Paramount Skydance Corp cleared a major regulatory hurdle on Wednesday when the European Union approved the company’s $110 billion acquisition of Warner Bros Discovery — but significant challenges remain on American soil.
The European Commission, which oversees competition policy across the EU, announced its approval after Paramount Skydance committed to shutting down a film distribution joint venture it shares with Universal Pictures in Europe. That partnership, known as United International Pictures, must be dissolved within 13 months of the deal closing.
Under the terms of the agreement, Paramount Skydance will be barred from entering into any film distribution arrangement with Universal in Europe for a period of 10 years. The company also agreed not to hand off the theatrical distribution of Warner Bros films to its own distribution arm.
The Commission stated that the commitments “fully address the competition concerns identified by the Commission by ensuring that the films of the merged entity will not be distributed jointly with those of Universal or Disney.”
Despite the European green light, the deal faces a much steeper climb in the United States. A U.S. court last week ordered the merger paused — even though it had already received clearance from the U.S. Department of Justice — after a California-led coalition of states argued the deal would cause irreparable harm to competition in the entertainment industry.
The delay carries a steep financial price tag. Paramount CEO David Ellison would be required to pay Warner Bros shareholders a 25-cent-per-share fee — roughly $7 million per calendar day — for every day the merger remains stalled beyond September 30.
The deal also faces a lawsuit from the Writers Guild of America, which contends the merger would threaten writers’ jobs and damage the overall health of the U.S. entertainment industry.
Adding to the complications, Britain announced last month that it may step in to review the deal over potential concerns about its impact on news coverage, children’s television programming, and streaming services.
