Hollywood Quake: Paramount Ditches Universal to Greenlight WBD Mega-Merger!

Paramount is set to divest from its United International Pictures (UIP) distribution joint venture with Universal, a crucial condition mandated by the European Union for its impending $111 billion acquisition of Warner Bros. Discovery. This strategic move directly responds to a request from the European Commission’s antitrust watchdog, which last week called for Paramount’s withdrawal from the venture.

The European Commission officially confirmed on Wednesday that a regulatory filing had been submitted by Paramount Skydance, affirming its commitment to exit UIP. As a consequence of this development, the provisional deadline for the Commission to render its decision on the approval of the extensive mega-merger has been extended, shifting from July 7 to a new date of July 22.

Established in 1981 and headquartered in London, UIP has undergone significant scaling back since its inception. Currently, it operates as a film distributor across several European territories, including Denmark, Greece, Croatia, Hungary, Norway, Poland, and Sweden, playing a focused role in these regional markets.

In a statement issued to Variety, a Paramount spokesperson confirmed the submission of the remedy to the European Commission. The spokesperson highlighted Paramount's constructive engagement with the Commission over an eight-month period, expressing confidence that the proposed remedy comprehensively and directly addresses all concerns raised in the Commission’s preliminary assessment, thus supporting a path toward timely clearance. Paramount also affirmed its intention to continue working collaboratively with the European Commission and other regulatory agencies as they proceed with their review process for what it describes as a pro-competitive transaction.

The monumental $111 billion deal, initially finalized in February following a protracted battle, aims to consolidate a vast array of media assets. Paramount’s holdings, encompassing CBS, CBS News, Paramount Pictures, and Paramount+, are slated to merge with Warner Bros. Discovery’s esteemed portfolio, which includes HBO and HBO Max, Warner Bros. Pictures, CNN, TNT, TBS, and HGTV, promising the creation of a global entertainment giant.

Beyond the European Commission’s review, which represents one of the final major regulatory hurdles, the proposed merger is also undergoing regulatory scrutiny in the United Kingdom. Lisa Nandy, the U.K.’s Secretary of State for Culture, Media and Sport, has indicated that the British government is likely to intervene, citing concerns regarding the maintenance of “a sufficient plurality” of media control within the U.K. landscape.

Specifically, within the U.K., the merger would consolidate the ownership of U.K. broadcaster Channel 5 and TNT Sports under the same corporate umbrella that also includes streaming services Paramount+ and the recently launched HBO Max, raising questions about market concentration and diversity in media ownership.

Financially, the Hollywood megamerger is bolstered by a substantial $24 billion investment from a consortium of sovereign wealth funds, including Saudi Arabia’s Public Investment Fund (PIF), Abu Dhabi’s L’imad Holding Company, and the Qatar Investment Authority (QIA). Notably, this significant financial contribution has not emerged as a point of contention for either the EU or U.K. regulatory bodies during their respective reviews.