Paramount-Warner Bros. Merger Cleared by UK Competition and Markets Authority

The United Kingdom’s Competition and Markets Authority has cleared the pending $110 billion Paramount-Warner Bros. Discovery merger. The CMA formally launched its Phase 1 investigation in June examining whether the deal was likely to substantially lessen competition in the UK, both in the distribution of films and production of TV content, as well as in relation to the wholesale supply of children’s channels and the supply of streaming services. “We have cleared this deal as it does not raise competition concerns in the UK,” a CMA spokesperson said. “The evidence shows that, after the merger, Paramount will continue to face sufficient competition in the various areas it operates in, including the production and distribution of films and TV content, the supply of children’s channels to pay-TV providers and the supply of streaming services.” In addition to the CMA, U.K. Secretary of Culture, Media and Sport Lisa Nandy decided not to intervene after reaching a “deed of covenant” with Paramount. This agreement includes a commitment not to combine linear channels with its streaming services and maintain the editorial independence of its news services and children’s networks. The commitments in the deed take effect upon completion of the transaction and remain in effect for five years. Commitments relating to Channel 5 will remain in effect until December 31, 2034, when Channel 5’s current public service broadcasting license ends. The latest clearance comes after the deal already received approval from the U.S. Department of Justice and Warner Bros. shareholders. The European Commission also cleared the deal with conditions, including Paramount’s exit from United International Pictures. Other countries where the deal has received clearance or where relevant waiting periods have expired include Australia, Austria, Brazil, Canada, China, Kuwait, Saudi Arabia, Serbia, South Africa, Ukraine, Montenegro, New Zealand, and North Macedonia. Foreign direct investment authorities in Spain, Germany, Slovenia, Belgium, Czechia, Italy, France and Romania have also signed off. In addition to Nandy’s review, the U.S. Federal Communications Commission is still reviewing the foreign investment in the deal, though a specific timeline for completion has not been publicly announced. A group of 12 state attorneys general also secured a temporary restraining order against the merger. A 12-day trial has been scheduled to start March 2, 2027, which will put Paramount on the hook for over $1 billion in ticking fees. The 25 cent per share fee, which takes effect starting Oct. 1, translates to to a payout of roughly $650 million per quarter, or $7 million per day, until closing. Paramount said it would push the closing of the merger back until five days after the outcome of a trial, or June 1, 2027, whichever comes earliest. In addition to the state AGs and WGA, a Paramount shareholder and a group of consumers filed separate lawsuits to block the merger, though the latter was dismissed by a judge. In the event that the deal does not close at all due to regulatory matters, Paramount will pay WBD a $7 billion termination fee. More to come…