The European Commission has approved Paramount Skydance’s $111bn (£84bn) takeover of Warner Bros Discovery on the condition that it ends its United International Pictures (UIP) film distribution joint venture with Universal Pictures.
In its ruling, the Commission expressed concern about Paramount’s distribution market power in Europe if it acquired WBD while continuing its UIP joint venture.
It noted: “The transaction would have meant Warner’s films were also distributed via UIP and, without the commitments, it would have led to worse rental and distribution terms for cinema operators, ultimately disadvantaging consumers.”
The Commission confirmed reports last month that Paramount had offered to pull out of UIP to secure a greenlight for the deal.
The Commission said that Paramount must terminate its stake in UIP in the European Economic Area (EEA) within 13 months from the closing of the transaction.
The company has also pledged not enter into any film distribution deal with Universal in Europe for 10 years and will not shift the distribution of Warner’s films to a theatrical distributor used by Paramount that also releases Universal or Disney films.
The Commission cleared the transaction from a production point of view, noting that enough film studios remain as competitors in the EEA - citing major US studios like Disney, NBC Universal and Sony, along with smaller US studios such as Amazon MGM, A24 and Lionsgate, as well as European studios.
In terms of TV and streaming services, the Commission said its investigation showed that “enough alternative competitors remain to exert sufficient competitive pressure on the merged entity in the EEA. In particular regarding the overlap in pay TV channels for children, the Commission found that streaming platforms offering children’s content will continue to act as a competitive constraint on the merged entity’s TV channels.”
News of the European merger clearance is good news for Paramount. Last week Paramount was ordered by a US court to pause the deal, which has been cleared by the US Department of Justice, after a California-led coalition of states argued the merger would harm competition.
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