The European Union has given regulatory approval to Paramount Group’s $81 billion acquisition of Warner Bros. Discovery this week, marking a key breakthrough for the mega-merger that stands to reshape the global entertainment and media industry. But the greenlight from Brussels does not come without significant strings attached.
As the EU’s top antitrust regulatory body, the European Commission concluded after its review that a combined Paramount-Warner entity would still leave sufficient competitive space across most key markets in the bloc’s 27 member states, including feature film production and subscription streaming. However, regulators flagged a critical risk of excessive market concentration in theatrical film distribution, which they warned could lead to less favorable rental and distribution terms for local cinema operators — a shift that would ultimately harm European consumers.
To resolve these competition concerns, the Commission announced that Skydance-owned Paramount has committed to divesting its full stake in United International Pictures (UIP) across the European Economic Area. UIP is a long-standing joint distribution venture between Paramount and Universal Pictures, which Paramount has relied on for decades to distribute its theatrical releases across markets outside North America. Under the terms of the approval, Paramount must fully exit the partnership within 13 months of closing the Warner Bros. Discovery acquisition, and is barred from entering any new similar distribution agreements with Universal for a 10-year period. An additional requirement mandates that all existing Warner Bros. theatrical distribution arrangements in the region be transitioned to Paramount’s existing European distribution pipeline. The Commission noted that its approval remains conditional on full compliance with these pledges, and that it will actively monitor implementation, though it declined to share additional details on enforcement mechanisms.
Paramount has framed the EU’s approval as a major milestone on the path to completing the transformative deal. In an official statement released Wednesday, the company argued that the regulatory clearance confirms its position that the combined entity will expand consumer choice and build a scaled media powerhouse capable of competing with the large tech firms that now dominate the global streaming and entertainment sector. Universal Pictures has not yet issued any public response to requests for comment on the new distribution commitments as of Wednesday.
If completed, the merger will bring together some of the entertainment industry’s most iconic intellectual properties and major platforms under one corporate roof: Warner Bros. Discovery’s HBO Max streaming service, the *Harry Potter* franchise and global news outlet CNN will be merged with Paramount’s existing assets, including the CBS broadcast network, the *Top Gun* franchise, and the Paramount+ streaming service. Beyond film and streaming, the combined company will also hold a portfolio of established European media assets, including Warner’s TVN Group in Poland and Paramount’s localized regional channels for flagship brands like MTV and Nickelodeon.
While the EU clearance moves the merger one step closer to closing, significant obstacles remain, most notably a major legal challenge in the United States. Earlier this week, a U.S. federal judge issued a temporary restraining order ordering a minimum two-week pause on all transaction activities, in response to a lawsuit filed by California and 11 other U.S. states that is seeking to block the merger entirely. The states argue that the combination would eliminate critical competition in Hollywood, leading to fewer content choices for American consumers, especially for moviegoers and cable television subscribers.
Paramount has repeatedly dismissed the states’ claims as without legal merit, and reiterated that position Wednesday, pointing out that the EU’s competition findings directly contradict core arguments underpinning the state attorneys general’s complaint, particularly around the competitive capacity of smaller and newer independent film studios. The transaction will remain on hold until at least the preliminary injunction hearing, scheduled to take place on August 3. In granting the temporary pause earlier this week, U.S. District Judge Araceli Martínez-Olguín ruled that the states had presented a compelling argument that the merged entity would likely substantially reduce competition in relevant U.S. markets, and that allowing the merger to proceed without a pause would make it extremely difficult, if not impossible, to unwind the transaction if the court ultimately sided with the states.
In a notable split with state regulators, the U.S. Justice Department — led by the current Trump administration — has declined to block the deal, and even released an extensive formal statement supporting the merger. The Justice Department argued that the combination of Paramount and Warner Bros. Discovery will deliver tangible benefits for both American consumers and workers. To date, Paramount has already secured regulatory approvals from multiple major jurisdictions including Australia, China and Canada. Regulatory reviews are still ongoing in other markets, with the United Kingdom already signaling that it may launch a formal intervention to review the deal.
The merger carries growing financial pressure for Paramount, which has agreed to pay Warner Bros. Discovery shareholders a daily “ticking fee” of roughly $7 million if the deal is not finalized by the September 30 deadline. When including Warner Bros. Discovery’s outstanding debt, the total transaction value is nearly $111 billion based on current share counts.
Separately, European regulators also signed off on the billions of dollars in financial backing Paramount has secured from three Gulf sovereign funds, based in Saudi Arabia, Qatar and the United Arab Emirates. In regulatory filings, Paramount has stressed that the funds will hold no voting rights in the combined company, but critics have raised persistent concerns over the potential for undisclosed behind-the-scenes influence from the foreign state backers.