UK opens investigation into $110 billion mega-merger between Paramount and Warner Bros. Discovery

Illustrative photo shows logos of Paramount and Warner Bros
Reuters
The UK competition watchdog has opened an investigation into the proposed acquisition of Warner Bros. Discovery by Paramount Skydance in a deal valued at US$110 billion. The information was released this Tuesday (9) by Bloomberg.
The analysis will be conducted by the Competition and Markets Authority (CMA), responsible for assessing whether the operation could harm competition in the media and entertainment sector.
If approved, the merger will bring together some of the biggest brands in the global audiovisual industry. The new group would control studios responsible for franchises such as Harry Potter, Mission: Impossible and the classic Casablanca, as well as assets such as CNN, CBS, HBO and dozens of television channels.
The CMA set August 7 as the deadline to complete the first phase of the investigation. At this stage, the body will decide whether the transaction raises competition concerns. If you understand that the risks are relevant, you can open an in-depth analysis that could last several months.
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According to the British authority, the film and television industries generate billions of pounds in the country's economy, making it necessary to carefully assess the impacts of the operation.
Pressure from unions and industry groups
The opening of the investigation was expected, but it comes amid pressure from unions, film industry associations and public interest groups to that the United Kingdom adopt a rigorous stance in analyzing the merger.
The deal is led by David Ellison, CEO of Paramount Skydance, who won a more than five-month battle against rival offers, including proposals from Netflix.
If the acquisition is approved, the Ellison family will control one of the largest media empires in the world.
David Ellison is the son of billionaire Larry Ellison, co-founder of Oracle and one of the richest people in the world.
Business also faces resistance in the United States
The operation also faces obstacles in the United States. According to information published by Reuters last week, states such as California and New York are preparing legal action to try to block the purchase of Warner by Paramount.
State authorities are evaluating possible competitive impacts of the merger and may argue that the union would reduce competition in the entertainment and media sector.
Paramount rejects the criticism. In statements to Reuters, the company stated that the operation would increase competition and that preventing the deal would give an undue advantage to already consolidated competitors, such as Netflix.
In addition to regulatory concerns, the transaction also faces resistance from actors, screenwriters and other Hollywood professionals, who fear job cuts after the integration of the companies.
European Union is also evaluating the merger
The European Union is another important front for approval of the agreement. The bloc's preliminary decision is scheduled for July 7.
According to Bloomberg, Paramount has already signaled its willingness to sell some assets aimed at children if necessary to obtain approval from European regulators.
The company also presented proposals to close antitrust investigations conducted by American states.
In a statement, a Paramount spokesperson stated that the opening of the investigation by the British authority was expected and that the company will continue to work constructively with the regulators.
See the numbers from the junction between Warner and Paramount
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Source: G1