Paramount-Warner merger faces EU scrutiny over market power
European regulators are scrutinizing the proposed Paramount and Warner Bros Discovery merger, a deal that would create an $80bn-debt laden behemoth and the largest buyer of film and television programming in the US, threatening to reshape transatlantic media markets.
The proposed merger between Paramount and Warner Bros Discovery is facing regulatory headwinds in Europe, threatening to delay the deal past its targeted September completion date. European Union authorities are reportedly looking skeptically at the transaction, adding transatlantic friction to a consolidation wave already facing fierce domestic opposition.
Warner Bros Discovery, carrying heavy debt and a portfolio of depreciating cable television assets, put itself up for sale after failed acquisition talks with Netflix. A union with Paramount would create a sprawling media entity saddled with an estimated $80bn in debt. The financial strain of combining two legacy Hollywood studios is already prompting drastic cost considerations. An adviser to Paramount CEO David Ellison told the Hollywood Reporter that “everything is on the table” regarding operations, after Tennessee’s deputy governor, Stuart McWhorter, publicly urged the company to relocate from Los Angeles to his state.
For European media markets, the core concern is buyer concentration. The Writers Guild of America, which is suing to stop the merger, warned that the combined firm “will be the largest buyer of original film and television programming in the United States, eliminating vigorous competition from a major film and television studio that has operated for more than a century.” Fewer major US buyers could weaken the negotiating leverage of European production companies and distributors selling into the American market.
US regulatory backlash
The European scrutiny mirrors a fierce legal backlash within the United States. California and 11 other states have filed suit to block the merger, despite it clearing federal review. A report from the LA County Department of Economic Opportunity estimated the merger would result in approximately 6,000 job losses, with 2,495 of those in Los Angeles County alone.
Paramount’s chief legal officer, Makan Delrahim, has pushed back against these projections. In comments to the LA Times, Delrahim argued that “once you look at it, it’s incredibly pro-competitive. It increases output, it increases jobs, and it lowers the cost to the consumers.”
However, the fundamental economics of the legacy media sector remain challenging regardless of regulatory outcomes. Both Paramount and Warner Bros Discovery are tethered to traditional cable networks that lose value with every cancelled television subscription. Even if regulators on either side of the Atlantic dismantle this specific deal, the structural decline of linear television will continue to pressure both companies to find partners or slash costs.
