WBD/PSKY

WBD/PSKY: Draft EC filing and remedy proposal close, but progress unlikely before vote

Paramount Skydance is nearing a draft merger-control filing with the European Commission for its Warner Bros Discovery bid, with a Phase I remedy proposal to follow, CTFN understands. 

The filing will come too late to give regulatory clarity in Europe on the Paramount offer before March, when target shareholders are expected to vote on a competing deal with Netflix.

For one, the filing is likely to be incomplete as it relies too heavily on public information and lacks input from Warner Bros Discovery, a source familiar with the situation told CTFN. The EC will only begin its investigation when the filing is complete.

Meanwhile, Netflix’s filing, though benefitting from more input from the target, is likely still some way off, the source said. If the EC is looking to review the two mergers simultaneously, that pushes a Paramount review even further off.

But Paramount already intends to propose a minor divestment in Phase I to remedy its overlap with Warner Bros Discovery in children’s television, CTFN understands. 

The EC may have other concerns, at least from third-party complainants. Both the Netflix and Paramount proposals have drawn the film industry’s ire for threatening theatrical-release windows via an expansion of the straight-to-streaming strategy.

In his latest attempt to allay such concerns, Paramount CEO David Ellison issued an open letter to European creatives and audiences today, February 5, in which he pledged that every film would get a global theatrical release of at least 45 days before moving onto a streaming service.

If Paramount and Warner Bros Discovery are allowed to combine, their studios will also increase the number of high-quality films they produce each year, he added.

UK review

The UK Competition and Markets Authority is also expected to review both the Paramount and Netflix bids.

Paramount began engaging with the CMA many weeks ago, a person familiar with the matter said.

Netflix, once it files, will have a slight chance to remedy all of the CMA’s concerns and avert an in-depth review, as the regulator has in the past year become more accepting of behavioral remedies in Phase 1, a lawyer representing a third party said.

But at least one third party CTFN has spoken to has already mandated a law firm to work on responses to upcoming invitations to comment from the CMA on both bids.

A second complainant is expected to argue that a Paramount deal would harm the market for football rights, CTFN understands. Paramount will from 2027 have the rights to screen Champions League matches, while Warner Bros Discovery has the UK rights to the country’s Premier League.

CTFN notes that regardless of concerns within the UK, the CMA is expected to make decisions on both offers that are consistent with those of other antitrust authorities reviewing the deal.

The CMA has faced criticism for erratic merger reviews in recent years, and it is commonly perceived as lacking the political support to block international megamergers that have been approved elsewhere.