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EU, FCC, UK and Other Regulators Scrutinize Foreign Ownership in Paramount-Warner Bros. Discovery Merger
The proposed merger between Paramount Skydance and Warner Bros. Discovery, valued at $110 billion, is facing a series of regulatory reviews that focus on the foreign ownership structure of the combined company.
On Tuesday, the European Commission posted a notice on its website announcing an investigation under the EU’s Foreign Subsidies Regulation (FSR). The review will examine the financing of the deal, which includes significant stakes held by Middle Eastern sovereign wealth funds. A provisional deadline for the investigation is July 14, while a separate Phase 1 merger investigation has a provisional deadline of July 7.
Paramount’s petition to the U.S. Federal Communications Commission (FCC) requests approval for foreign investors to hold up to 49.5 % of the equity of the merged entity, with the possibility of indirect ownership of up to 100 % in light of routine fluctuations in publicly held equity. Paramount states that the ownership stake will not confer control, governance rights, or board seats.
Three Middle Eastern sovereign wealth funds will own a total of 38.5 % of the non‑voting equity in the combined company. Saudi Arabia’s Public Investment Fund (PIF) will hold 15.1 %, L’Imad Holding Company 12.8 %, and the Qatar Investment Authority 10.6 %. Other foreign equity owners include passive limited‑partner investors in funds managed by RedBird Capital Partners (5.8 %) and foreign‑based entities that have acquired the company’s Class B stock (5.2 %).
In the United Kingdom, the Competition and Markets Authority (CMA) will decide whether to refer the transaction to a more in-depth Phase 2 investigation by August 7. Paramount’s CEO, David Ellison, met with UK Secretary of Culture, Media and Sport Lisa Nandy in January to discuss the benefits of the deal and with U.S. Department of Justice officials in May. The DOJ’s Hart‑Scott‑Rodino review period expired in February, but the regulator can still intervene.
State attorneys general are also involved. Around ten state AGs, including California and New York, have issued subpoenas or civil investigative demands focused on the DOJ investigation and the competitive effects of the merger. Two individuals familiar with the matter told TheWrap that the states are preparing to file lawsuits to block the merger. California Attorney General Rob Bonta said the states have “red flags everywhere” but did not provide a specific timeline.
In Australia, the Competition and Consumer Commission (ACCC) granted regulatory approval on Wednesday, subject to a 14‑day waiting period that expires on June 23. The ACCC noted that the deal is unlikely to substantially lessen competition in the wholesale supply of films for theatrical release in Australia. While the merger removes competition between Paramount and Warner Bros., the combined entity will still be constrained by other film studios.
The New Zealand Commerce Commission indicated that it does not intend to consider the merger further, citing a voluntary clearance regime. The deal has also received clearances from competition authorities in Saudi Arabia, Ukraine, Serbia, and North Macedonia, and foreign‑direct‑investment authorities in Germany, Slovenia, Belgium, Czechia, New Zealand, Italy, France, and Romania.
The merger was approved by Warner Bros. shareholders in April and is expected to close by the end of the third quarter. If the transaction does not close by September 30, Warner Bros. Discovery shareholders will receive a 25‑cent per share “ticking fee” for each quarter until closing. If the deal does not close at all due to regulatory matters, Paramount will pay Warner Bros. Discovery a $7 billion termination fee.
The series of investigations and approvals highlights the complex regulatory landscape that the merger must navigate. Key deadlines are set for mid‑July in the EU and early August in the UK, while Australian and New Zealand reviews are already concluded. The outcome of these reviews will determine whether the $110 billion consolidation can proceed as planned.
On Tuesday, the European Commission posted a notice on its website announcing an investigation under the EU’s Foreign Subsidies Regulation (FSR). The review will examine the financing of the deal, which includes significant stakes held by Middle Eastern sovereign wealth funds. A provisional deadline for the investigation is July 14, while a separate Phase 1 merger investigation has a provisional deadline of July 7.
Paramount’s petition to the U.S. Federal Communications Commission (FCC) requests approval for foreign investors to hold up to 49.5 % of the equity of the merged entity, with the possibility of indirect ownership of up to 100 % in light of routine fluctuations in publicly held equity. Paramount states that the ownership stake will not confer control, governance rights, or board seats.
Three Middle Eastern sovereign wealth funds will own a total of 38.5 % of the non‑voting equity in the combined company. Saudi Arabia’s Public Investment Fund (PIF) will hold 15.1 %, L’Imad Holding Company 12.8 %, and the Qatar Investment Authority 10.6 %. Other foreign equity owners include passive limited‑partner investors in funds managed by RedBird Capital Partners (5.8 %) and foreign‑based entities that have acquired the company’s Class B stock (5.2 %).
In the United Kingdom, the Competition and Markets Authority (CMA) will decide whether to refer the transaction to a more in-depth Phase 2 investigation by August 7. Paramount’s CEO, David Ellison, met with UK Secretary of Culture, Media and Sport Lisa Nandy in January to discuss the benefits of the deal and with U.S. Department of Justice officials in May. The DOJ’s Hart‑Scott‑Rodino review period expired in February, but the regulator can still intervene.
State attorneys general are also involved. Around ten state AGs, including California and New York, have issued subpoenas or civil investigative demands focused on the DOJ investigation and the competitive effects of the merger. Two individuals familiar with the matter told TheWrap that the states are preparing to file lawsuits to block the merger. California Attorney General Rob Bonta said the states have “red flags everywhere” but did not provide a specific timeline.
In Australia, the Competition and Consumer Commission (ACCC) granted regulatory approval on Wednesday, subject to a 14‑day waiting period that expires on June 23. The ACCC noted that the deal is unlikely to substantially lessen competition in the wholesale supply of films for theatrical release in Australia. While the merger removes competition between Paramount and Warner Bros., the combined entity will still be constrained by other film studios.
The New Zealand Commerce Commission indicated that it does not intend to consider the merger further, citing a voluntary clearance regime. The deal has also received clearances from competition authorities in Saudi Arabia, Ukraine, Serbia, and North Macedonia, and foreign‑direct‑investment authorities in Germany, Slovenia, Belgium, Czechia, New Zealand, Italy, France, and Romania.
The merger was approved by Warner Bros. shareholders in April and is expected to close by the end of the third quarter. If the transaction does not close by September 30, Warner Bros. Discovery shareholders will receive a 25‑cent per share “ticking fee” for each quarter until closing. If the deal does not close at all due to regulatory matters, Paramount will pay Warner Bros. Discovery a $7 billion termination fee.
The series of investigations and approvals highlights the complex regulatory landscape that the merger must navigate. Key deadlines are set for mid‑July in the EU and early August in the UK, while Australian and New Zealand reviews are already concluded. The outcome of these reviews will determine whether the $110 billion consolidation can proceed as planned.
