EU clears $81bn Paramount-Warner merger with cinema conditions

The European Union has approved Paramount’s $81 billion takeover of Warner Bros. Discovery, removing a major barrier to a transatlantic media mega-merger. The European Commission concluded that a combined Paramount-Warner would still face sufficient competition in film production and streaming across the bloc.

However, regulators identified a critical bottleneck in the distribution of movies to theatres. The Commission warned that combining the two studios could force "worse rental and distribution terms for cinema operators, ultimately disadvantaging consumers."

To resolve this, Paramount agreed to sever its ties in the European Economic Area with United International Pictures, its longstanding theatrical distribution joint venture with Universal. The company must exit this partnership within 13 months of closing the Warner acquisition and is barred from striking new distribution agreements with Universal for a decade. Additionally, Warner’s current European theatrical distribution must be shifted into Paramount’s existing pipeline.

For European audiences, the merger consolidates significant local broadcasting assets. Warner’s TVN Group in Poland will sit alongside localized Paramount channels like MTV and Nickelodeon, while streaming libraries merging HBO Max with Paramount+ bring franchises like "Harry Potter" and "Top Gun" under one roof. Paramount stated the clearance represents "a major milestone," arguing the combined business will have the scale "capable of competing with the tech companies that have come to dominate the industry."

Despite Brussels’ blessing, the deal faces a fractured transatlantic regulatory landscape. A U.S. federal judge paused the transaction for at least two weeks after a lawsuit by California and 11 other states. The judge noted the states made a strong case that the merger would "substantially lessen competition" and be difficult to unwind.

Paramount pushed back against the U.S. states, arguing the EU’s findings "directly refute key assumptions that underpin the state AGs’ complaint." This contrasts with the U.S. Justice Department, which declined to block the deal. Regulators in the United Kingdom are also still reviewing the transaction and have signaled they may intervene.

The stalled progress carries steep financial consequences. Including debt, the total deal value sits near $111 billion. Paramount must pay Warner shareholders a "ticking fee" of roughly $7 million per day if the acquisition does not close by September 30.

Separately, European regulators approved the billions in financial backing Paramount secured from Saudi Arabia, Qatar, and the United Arab Emirates. Paramount maintains these sovereign funds will hold no voting rights. However, critics continue to question the potential for behind-the-scenes influence over European media assets.