Paramount-Warner Bros. merger wins UK approval, U.S. trial still stands in the way

The Paramount-Warner Bros. merger has currently become one of the biggest deals in the global entertainment world. Paramount’s $111 billion takeover of Warner Bros. Discovery has received approval from the UK Competition and Markets Authority (CMA).

At the same time, Paramount has signed a deed of covenant and undertaking with the UK Department for Digital, Culture, Media, and Sport (DCMS). Under this agreement, DCMS confirmed that it will not issue a Public Interest Intervention Notice, which means the department will not block or challenge the merger on public interest grounds.

DCMS further mentioned that Paramount has given assurances to address the concerns raised by the Secretary of State about the deal. As per the affirmation, there is a clear commitment not to amalgamate Paramount-Warner Bros. linear channels with on-demand UK services. The promise further commits to ensuring Channel 5 continues as a public service broadcaster, while preserving its editorial independence and ensuring it serves audiences with impartial and diverse programming.

Continue reading more about the story of the Paramount-Warner Bros. merger.

The UK clears the Paramount-Warner Bros. merger deal

The UK culture secretary, Lisa Nandy, has confirmed that she will not step in to block the merger, even though she had earlier said she would conduct a closer review. The CMA has also approved the deal, so there will be no further investigation.

The UK was seen as one of the last major international hurdles for David Ellison, and this clearance allows the Paramount chief to turn his attention to the U.S. lawsuit scheduled for trial in March 2027.

To meet UK regulatory requirements, Paramount signed a deed of covenant with the DCMS. The agreement requires the company to keep linear TV channels separate from streaming platforms and to protect the editorial independence of its news and children’s services.

According to Deadline, Paramount said in a statement,

"Paramount is grateful to the CMA for its constructive engagement and its review of the transaction."

The channel further added,

"These clearances recognize that the combination of Paramount and WBD will enhance consumer choice and enable a creative-first company to invest in more projects and bring stories to audiences worldwide."

The commitments will begin once the merger is complete and will remain in place for five years. They guarantee that Channel 5 News will continue to operate independently from CBS News and CNN International. They also ensure that HBO Max and Paramount+ will not merge, while Channel 5 will keep its role as a public service broadcaster.

U.S. legal barriers

A team of 12 state attorneys general has obtained a temporary restraining order against the Paramount-Warner Bros. merger. A 12-day trial is set to begin next year on March 2, which will leave Paramount responsible for more than $1 billion in ticking fees.

Starting on October 1, the fee is 25 cents per share, which equals $650 million every quarter, or $7 million each day, until the merger closes. Paramount argued that the merger does not raise antitrust problems and criticized the lawsuit filed by the state attorneys general as misguided and manipulated.

One of the Paramount shareholders and a group of consumers filed lawsuits to stop the merger, but the consumer lawsuit was dismissed by a judge. As a result, the company announced that the closing of the merger will be delayed until five days after the trial ends. If the merger fails to close because of regulatory issues, the company must pay Warner Bros. Discovery a termination fee of $7 billion.

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