EU Approves Paramount Warner Deal
EU approves Paramount Warner deal, EC conditional clearance narrows regulatory hurdle and advances closing odds despite U.S. state litigation.
KEY TAKEAWAYS
- European Commission granted conditional clearance requiring UIP divestiture and a 10-year ban on joint distribution.
- The decision removes a major EU regulatory barrier and materially improves the transaction's path to closing.
- U.S. state attorneys general litigation and a pending UK review preserve meaningful timing uncertainty for closing.
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Paramount Skydance Corporation’s proposed acquisition of Warner Bros. Discovery won conditional European Commission clearance on July 22, 2026, after concessions on film distribution. The approval advances the transaction while U.S. state attorneys general continue litigation.
European Commission Grants Conditional Approval
The European Commission approved Paramount’s acquisition of Warner Bros. Discovery on the condition that Paramount divest its stake in United International Pictures (UIP), the European theatrical-distribution joint venture with Universal Pictures. Paramount must also refrain from any joint film distribution arrangements with Universal in the European Economic Area (EEA) for 10 years.
Under the commitments, Paramount must exit its Universal distribution agreements and divest UIP within 13 months of closing. The Commission handled the case as a Phase I review after the transaction was notified on June 2, 2026, extending the usual 25-working-day timetable by 10 days to assess remedies.
The Commission found no significant competition concerns at the film production level, citing continued rivalry from Disney, NBC Universal, Sony, Amazon MGM, A24, Lionsgate, and European studios. Early concerns about children’s television were resolved without requiring divestiture of Cartoon Network, despite Paramount’s ownership of Nickelodeon.
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.”
Deal Terms and Regulatory Risks
Paramount announced in a February 27, 2026 press release that it entered a definitive merger agreement to acquire Warner Bros. Discovery for $31 per share in cash, valuing the company at $81 billion in equity and $110 billion in enterprise value. The deal financing includes $47 billion of committed equity fully backed by the Ellison Family and RedBird Capital Partners, issuance of new Class B Paramount shares at $16.02 per share, and $54 billion of debt commitments from Bank of America, Citigroup, and Apollo. This debt package includes $15 billion to backstop an existing bridge facility and $39 billion of new incremental debt. The transaction is not subject to any financing conditions.
The merger is expected to close in the third quarter of 2026, subject to customary closing conditions and Warner Bros. Discovery shareholder approval. If the deal does not close by September 30, 2026, Warner Bros. Discovery shareholders will receive a $0.25 per-share ticking fee for each quarter until closing. Paramount has publicly stated it is on track to close by the end of September.
Paramount has reported that competition regulators in 16 jurisdictions have cleared the transaction or allowed waiting periods to expire. Foreign direct investment approvals have been secured in countries including Germany, France, Spain, Slovenia, Belgium, Czechia, New Zealand, Italy, and Romania.
The U.S. Department of Justice’s Antitrust Division has completed its review and cleared the proposed merger, finding no federal antitrust concerns. However, state attorneys general are pursuing litigation to block or delay closing. Paramount described the state attorneys general’s challenge as one that “defies evidence-based antitrust enforcement and must be rejected.”
A California federal judge rejected a private challenge by streaming customers seeking to temporarily block the deal. Separately, a temporary restraining order has affected the closing timeline, with a hearing scheduled on the states’ request to prevent closing.
The deal’s financing, which involves Saudi Arabia’s Public Investment Fund, Abu Dhabi’s L’imad Holding Company, and the Qatar Investment Authority, is also subject to review under the EU Foreign Subsidies Regulation. Authorities have indicated the transaction is expected to receive unconditional clearance in that process.
In the U.K., the Competition and Markets Authority opened a statutory review on June 10, with a decision deadline of August 7. The review faces political scrutiny over media plurality concerns, but no final decision has been announced.
The European Commission’s conditional clearance removes a major regulatory hurdle in Europe and improves the transaction’s path to closing. However, ongoing U.S. litigation and pending U.K. and foreign subsidies reviews leave the timetable and final terms subject to further legal and regulatory outcomes.
