The European Commission on Wednesday approved the merger of Paramount Skydance and Warner Bros. Discovery, removing one of the few remaining obstacles to the $111 billion deal.
As a condition of approval, Paramount has already agreed to end its film distribution partnership with Universal in Europe within the next 13 months.
A federal judge in Oakland, California, on Monday temporarily blocked the merger pending a hearing on a preliminary injunction sought by 12 states, including California and New York. The states argue that the deal would combine two of the nation’s top three basic cable producers and two of the top movie distributors, leading to higher prices and lower production.
The European Commission conducted a similar study of the implications within the European Union and found that the agreement would not have a negative impact on competition in television and film production, as there would remain sufficient global and domestic competitors. The commission’s investigators warned that Paramount’s longstanding joint venture with Universal (United International Pictures) could lead to overconcentration in the film distribution market.
Paramount met with European regulators and agreed to end the partnership and refrain from entering into similar agreements for at least 10 years.
“These commitments fully address the competition concerns identified by the Commission by ensuring that the combined entity’s films are not co-distributed with Universal or Disney films,” the commission said in a statement.
Britain is still considering whether to intervene in the deal. Paramount has already received approval from the U.S. Department of Justice and about 20 other countries, including Australia and China.
In addition to the state coalition, the Writers Guild of America is suing to block the merger, arguing that it would limit pay and creative opportunities for film and television writers.
“Today’s European Commission approval marks another important milestone in the partnership between Paramount and Warner Bros. Discovery. We appreciate the Commission’s constructive engagement and thorough analysis throughout the review,” Makan Delrahim, Paramount’s chief legal officer, said in a statement.
Delahim added: “Not only will this combination not have a negative impact on competition, it will actually strengthen competition by creating a large media and entertainment company with the ability to truly challenge the technology platforms that have come to dominate the industry. Strengthening competition will support increased investment in content, expand creative opportunities and provide consumers with greater choice.”
