Brussels approves the merger of Paramount and Warner Bros. Discovery

The European Commission has approved the $110 billion merger between Paramount Global and Warner Bros. Discovery, subject to commitments regarding film distribution within the EU market, which Paramount has agreed to fulfill. The approval was announced on July 22, 2026, following a review process that scrutinized potential impacts on competition. The merger involves two major players in the production and distribution of cinematic and audiovisual entertainment content, including films and television series. According to statements from both companies, the planned merger aims to strengthen competition in the rapidly evolving sector of entertainment content production, which continues to expand into areas such as streaming services. In Brussels, officials assessed the potential impact of the merger on competition within the EU, particularly concerning the production and distribution of films for cinema exhibition, the production and licensing of audiovisual content, and the sale of television channels and related services. Both companies operate within the EU, managing streaming video services, licensing films, and distributing content to European public broadcasting institutions and cinemas. The European Commission concluded that despite the merger, there would still be sufficient competition in the field of film production within the European Economic Area. It cited other large American studios such as Disney, NBCUniversal, and Sony, as well as smaller ones like Amazon MGM, A24, and Lionsgate, along with European studios, as existing competitors. However, the commission also noted concerns over excessive concentration of market power in film distribution. Paramount Pictures and Universal Pictures currently distribute films to cinema operators through their joint venture, United International Pictures. The commission warned that the transaction could mean Warner’s films would also be distributed via this channel. Without Paramount's commitments, this could lead to worse borrowing and distribution terms for cinema operators, ultimately placing consumers in a worse position. As part of its conditions, Paramount has committed to not entering into any agreements or arrangements with Universal regarding shared film distribution within the EU, which includes 27 member states. An independent body will monitor the fulfillment of these commitments. Despite the European Commission’s approval, the merger faces ongoing legal challenges in the United States. On July 22, 2026, a federal judge in California issued a temporary stay of the transaction for 14 days while the court considers a lawsuit filed by 12 Democratic state attorneys general led by California Attorney General Rob Bonta. These attorneys argue that the merger would significantly reduce competition in the U.S. film distribution and cable television markets, harming consumers. In her order, the judge stated that the states have presented credible evidence that the combined entity would gain substantial market share in film distribution and that there are weighty reasons to suspect the acquisition could notably limit competition. The court is set to decide whether to issue a longer stay on August 3. If it does, the merger could remain blocked for several months, posing a significant challenge for Paramount, which is owned by supporters of former President Donald Trump. The outcome of this legal battle will determine whether the merger can proceed in the U.S., adding another layer of uncertainty to the deal.