The proposed mega-merger between Paramount and Warner Bros. Discovery is facing fresh regulatory scrutiny in Europe over the role of Middle Eastern investors in financing the deal. The European Commission said in a filing this week that Paramount’s planned takeover of WBD will be reviewed under the European Union’s Foreign Subsidies Regulation, adding another layer of oversight to an already complex transaction.
The Commission must decide by July 14 whether to clear the agreement or launch a full investigation. The deal is being funded with about $24 billion from Middle Eastern entities, according to the filing. Investors in the merger include Saudi Arabia’s Public Investment Fund, Qatar Investment Authority and Abu Dhabi’s L’imad Holding Co., alongside U.S.-based RedBird and LionTree, Paramount disclosed in an SEC filing in April.
The Foreign Subsidies Regulation review is separate from the European Commission’s broader merger investigation. That competition review is already in Phase 1, with a deadline of July 7. Analysts and competition scholars have suggested that the case is likely to move into a Phase 2 investigation, which would mean a deeper examination of the deal’s impact on competition in Europe.
The scrutiny in Brussels comes as regulators in other markets also begin to assess the merger. This week, the United Kingdom’s Competition and Markets Authority opened a formal investigation into the $110 billion Paramount-Warner Bros. Discovery transaction. The UK probe adds to the pressure on the companies as they seek approval for one of the largest media deals in recent years.
The merger would combine two major entertainment and media groups and could reshape the global media landscape. But the size of the deal, the cross-border financing structure and the involvement of sovereign wealth funds have drawn attention from regulators concerned about subsidies, market power and competition effects.
The European Union’s Foreign Subsidies Regulation is designed to examine whether financial support from non-EU governments may distort the internal market. In this case, the focus is on whether the Middle Eastern capital backing the transaction could create an unfair advantage. The separate merger review will assess the competitive implications of combining the two companies, including the effect on content, distribution and market concentration.
With deadlines approaching in both the EU and the UK, the Paramount-Warner Bros. Discovery merger faces a series of important regulatory hurdles. The outcome of those reviews will determine whether the companies can proceed with the transaction as planned or whether they will face delays, remedies or a more extensive investigation before any approval is granted.
