Warner Bros.-Paramount Merger Is Temporarily Blocked in the United States. EU Regulators Just Cleared It

European Union antitrust regulators have approved Paramount Skydance's proposed $110 billion acquisition of Warner Bros. Discovery, clearing one of the transaction's biggest regulatory hurdles after the company agreed to a series of concessions aimed at preserving competition in the European film distribution market.

The European Commission said the deal could proceed after Paramount committed to dismantling its long-standing United International Pictures (UIP) joint venture with Universal Pictures within 13 months of the merger's completion.

The company also pledged not to enter into new film distribution agreements with Universal in Europe for the next decade and agreed not to use its own distribution network for Warner Bros.' theatrical releases in the region.

Regulators concluded those commitments addressed concerns that the merger could have concentrated too much power in European theatrical film distribution. The approval marks a significant milestone for what would become one of the largest entertainment mergers in history.

European regulators had focused their review primarily on how the merger could affect the distribution of theatrical films across the European Economic Area. Paramount's ownership stake in United International Pictures, which jointly distributes films with Universal in several European markets, raised concerns that combining those operations with Warner Bros.' own distribution business could reduce competition for cinemas and consumers.

By requiring Paramount to unwind the joint venture and accept restrictions on future distribution partnerships, the Commission sought to ensure that studios continue competing independently for theatrical releases across Europe.

Meanwhile, UK authorities have indicated they are considering whether to intervene on public-interest grounds, citing potential implications for news, children's programming and competition in streaming services.

While the EU's decision removes a major obstacle, the merger continues to face legal and regulatory challenges elsewhere. In the United States, a federal judge recently ordered Paramount Skydance to temporarily pause completion of the acquisition while a lawsuit brought by a coalition of states proceeds.

"The proposed merger would extinguish competition," the lawsuit argues, alleging consumers could face "higher prices, lower quality, and less content for film," while creative workers could encounter fewer employment opportunities and less bargaining power.

According to the states, the merged company would control roughly 27% of the U.S. theatrical film distribution market. Combined with Disney, Universal, and Sony, four companies would account for the overwhelming majority of major studio releases, raising concerns about competition throughout the entertainment industry.

The lawsuit also argues that consolidation would strengthen the company's leverage over movie theatres, basic cable distributors, and, ultimately, audiences nationwide, while reducing incentives to invest in diverse programming and independent productions.

The legal challenge comes despite the U.S. Department of Justice previously allowing the transaction to move forward after concluding its federal antitrust review. Several international regulators have also approved the merger or are continuing their reviews, leaving the coalition of state attorneys general as the deal's most immediate legal obstacle.

Paramount Skydance has strongly defended the acquisition, arguing that combining with Warner Bros. Discovery is necessary to compete against technology giants such as Netflix, Amazon and YouTube, which have reshaped the global entertainment landscape.

The company has also said the merger would generate billions of dollars in efficiencies while allowing it to invest more heavily in films, television programming and streaming services.

Paramount is racing to complete the acquisition before a Sept. 30 contractual deadline. If the deal is delayed beyond that date, the company could face significant financial penalties, including quarterly payments to Warner Bros. Discovery shareholders and potentially billions of dollars in additional costs if regulatory hurdles ultimately prevent the transaction from closing.