One of the largest media mergers in recent history has passed a critical European regulatory hurdle, but the $110 billion combination of Paramount Skydance and Warner Bros Discovery remains entangled in legal and political pushback in the United States, putting the entire deal at risk of costly delays. The European Commission, the European Union’s top competition watchdog, announced last week that it had approved the transaction after Paramount agreed to sweeping concessions to address anti-competition concerns. To satisfy regulators, Paramount committed to terminating its long-standing film distribution partnership with rival studio Universal Pictures across the European Economic Area within 13 months, and is barred from entering any similar joint distribution arrangement for a 10-year period. Regulators had raised alarms that the existing partnership, combined with the scale of the merged media giant, would create an unrivaled hold over European cinema release scheduling and distribution, reducing competition and limiting options for audiences and theater operators. While the EU green light marks a major milestone for the deal, it only resolves one of multiple global regulatory and legal challenges. In the United States, the merger is currently on ice after a coalition of 12 state attorneys general filed a lawsuit last week to block the transaction entirely. Though the U.S. Department of Justice signaled its support for the merger back in June, the states’ lawsuit argues that the combined company would wield excessive market power that would inflict widespread damage on independent movie theaters, domestic basic cable providers, and ultimately consumers across the country. Just days after the lawsuit was filed, U.S. District Judge Araceli Martínez-Olguín granted a temporary restraining order to pause the takeover, allowing time for the court to review the states’ legal claims. Alon Kapen, a corporate transaction attorney at New York-based law firm Farrell Fritz, noted that the temporary pause is not a final ruling on the case, but it indicates the court takes the states’ arguments about harm to the theatrical exhibition market seriously. Beyond the immediate legal standoff, delays come with steep financial consequences for Paramount. The merger agreement includes a provision that requires Paramount to pay a so-called “ticking fee” of approximately $7 million per day to Warner Bros Discovery shareholders if the transaction is not finalized by the September 30 deadline. This penalty structure means even a two-week delay would add $98 million to Paramount’s acquisition costs, while a multi-month delay could run into hundreds of millions of dollars in additional expenses. The merger also faces fierce opposition from organized labor in Hollywood: the Writers Guild of America (WGA), the union representing film and television writers in the U.S., has come out strongly against the deal, warning it will lead to widespread job cuts and suppress writer wages. In an official statement released after the states filed their lawsuit, WGA president Tom Fontana argued that the merged company would hold unprecedented bargaining power over creative talent, allowing it to push down compensation and cut back opportunities for new and emerging writers. On top of the U.S. legal challenge, regulators in the United Kingdom are still conducting their own independent review of the merger. UK watchdogs have raised specific concerns about the impact on domestic news programming, children’s content, and competition in the global streaming market, and have not ruled out launching their own intervention to block or modify the deal. For its part, Paramount has defended the merger consistently, arguing that the combination of the two studios will ultimately deliver greater value to audiences. The company has pledged that the merged entity will release at least 30 new feature films to cinemas globally every year, double the number of theatrical releases Paramount currently produces annually, a commitment it says will boost the global film exhibition industry and give audiences more high-quality theatrical content.
EU clears $110bn Paramount and Warner Bros merger, but it remains on hold in US
