Paramount wins Brussels approval, but the real fight is elsewhere

Brussels has given Paramount Skydance what passes for a green light in EU competition policy: permission, but only after a stack of conditions. On Wednesday, the European Union conditionally approved the company’s $110 billion takeover of Warner Bros. Discovery, saying the arrangement could go ahead only if Paramount accepts remedies tied to film distribution in Europe.

The main demand is straightforward, if not exactly elegant. Paramount must end its stake in United International Pictures, the joint venture it shares with Universal, in the European Economic Area, which includes the EU’s 27 member states. It must also avoid, for 10 years, any direct or indirect agreement with Universal to distribute films jointly in that market. The Commission said an independent trustee will oversee whether those commitments are honoured — a familiar Brussels solution, and one that keeps the oversight industry nicely employed.

The EU argued that the merger is unlikely to damage competition in film production. Officials pointed to the presence of large rivals such as Disney, smaller US studios including Amazon MGM, and European producers. The logic is predictable enough: the concern is not that the market will disappear, but that a further concentration of power rarely improves prices, choice or accountability. Hollywood has spent years compressing itself into fewer and larger players; regulators, belatedly, have noticed.

This is not the end of the matter, of course. The deal still faces legal obstacles in the United States, where a federal judge in California has temporarily paused the merger. A hearing on a preliminary injunction is scheduled for 3 August, and that could block the transaction from closing before a final ruling. So much for the fantasy that a $110 billion deal can simply roll forward once the paperwork is signed.

The opposition has been vocal and, from the industry’s point of view, rather inconvenient. Critics warn that if the merger is completed it could reshape Hollywood, cut the number of major US film studios to four, and lead to job losses, fewer films and weaker competition. Those are not abstract concerns; they are the sort of consequences that follow when a market keeps rewarding scale and then acts surprised when scale starts eating everything else.

For Paramount, the message is clear enough. Europe has approved the deal, but only after clipping one of its distribution arms. The United States may yet decide whether the merger survives at all. That leaves the company with a familiar corporate prize: a conditional blessing in Brussels, a courtroom in California, and a deal whose final shape is still very much in question.

Written by Andreas Hofer andreas.hofer@alpineweekly.com