Paramount may pull out of UIP distribution deal with Universal to win EU backing for WBD takeover

Paramount’s $111bn (£84bn) takeover of Warner Bros Discovery is set to be approved by European Union regulators, according to reports. 

The deal was given the green featherlight by the US Department of Justice earlier in June and is now close to securing the nod by the EU’s European Commission, according to a report in the Financial Times today. 

Certain caveats would apply, the newspaper added, including Paramount potentially having to pull out of its United International Pictures film distribution joint venture with Universal Pictures.

Reuters also reported that a proposal to that effect would be made to EU regulators on Tuesday, 30 June, quoting a source familiar with the deal.

Politico has said Paramount should be able to gain clearance for the deal if it cuts ties with Universal Pictures for film distribution in several EU countries, citing two people familiar with the matter.

The landmark acquisition will bring together streamers Paramount+ and HBO Max in Europe, as well as numerous production entities and broadcast operations.

Paramount also operates regional streamer SkyShowtime across much of Europe in a partnership with NBCUniversal. The future of the service is unclear.

Paramount is funding the acquisition using financing from Larry Ellison, father of chief exec David Ellison, as well as around $24bn from Saudi Arabia’s Public Investment Fund (PIF) and the Qatar Investment Authority (QIA).

A final decision from the EU on whether to approve the deal or expand its investigation is due to be made by July 7. However, if Paramount puts forward a proposal to divest its Universal Pictures deal, the deadline would be extended to July 21.

The UK’s Competition and Markets Authority (CMA) launched its inquiry into the deal earlier this month, setting a deadline of August 7, while several US states, including California, are set to file a lawsuit to block the deal, citing concerns of job losses and reduced competition.

Paramount landed its deal with WBD following stiff competition from Netflix. As part of its improved offer, the David Ellison-led US studio promised a ‘ticking fee’ element, which will see shareholders in the HBO owner receiving around $650m each quarter after 30 September until the transaction closes.

Paramount did not comment on the report in the Financial Times. 

This article was first published in Screen’s sister title Broadcast.