Paramount set to divest Universal Pictures JV to ease EU concerns over $110bn WBD merger

BRUSSELS: It may be one of Hollywood’s biggest mergers, but before the credits can roll, regulators want one more scene rewritten. As the proposed $110 billion merger between Paramount Global, Skydance Media and Warner Bros. Discovery nears the finish line, Paramount is preparing to sell its international theatrical distribution joint venture with Universal Pictures in an effort to secure approval from European regulators.

The move comes after discussions with the European Commission highlighted concerns that combining the extensive film libraries of Paramount and Warner Bros. could give the merged company excessive influence over cinemas and film distribution across Europe.

According to reports, cinema operators argued that placing two of Hollywood’s largest catalogues under a single corporate umbrella could reduce competition and increase negotiating power over exhibitors. Rather than risk a lengthy antitrust investigation, Paramount has opted to offer a structural remedy by divesting its international distribution venture with Universal.

The joint venture currently handles theatrical distribution for Paramount and Universal films in several overseas markets. Regulators reportedly viewed the distribution business as a more significant competition issue than some of the smaller assets that had previously been rumoured as potential divestment candidates.

Earlier speculation suggested Paramount could be asked to sell certain children’s television assets. However, because EU authorities did not raise substantial concerns about broadcasting operations, attention shifted instead to theatrical film distribution.

The formal proposal is expected to be submitted to European regulators next week. Once filed, the concession will automatically extend the European Commission’s preliminary review period by ten working days, moving the deadline from 7 July to 21 July.

Alongside the antitrust review, the merger is also being examined under the European Union’s Foreign Subsidies Regulation because of financial backing from Middle Eastern investors, including the Public Investment Fund and the Qatar Investment Authority. Industry observers, however, largely expect that review to conclude without conditions.

The proposed transaction represents one of the most ambitious consolidation efforts in modern media history. The combined group would bring together an enormous collection of entertainment assets, including Paramount Pictures, Warner Bros. Studios, HBO, Max, Paramount+, CBS, CNN and DC Studios. Franchises such as Mission: Impossible, Batman and Harry Potter would effectively sit under the same corporate roof.

A major part of the strategy revolves around streaming. Plans are reportedly underway to combine HBO Max and Paramount+ into a single platform capable of reaching more than 210 million subscribers globally, creating a stronger challenger to streaming leaders such as Netflix and Disney.

While the merger has already received clearance from the U.S. Department of Justice, challenges remain. A coalition of state attorneys general, including officials from New York and California, is reportedly preparing a separate legal challenge on competition grounds.

For now, Europe appears to hold the key to the deal’s final chapter. If regulators accept Paramount’s proposed remedy, the entertainment industry could soon witness the creation of one of the most powerful media companies ever assembled. Until then, the merger remains in its final act, waiting for regulatory applause before taking centre stage.