Hollywood’s boardroom battle of the decade has ended with Paramount dramatically snatching Warner Bros. Discovery from Netflix.
The tussle has been a lengthy one, and one that has played out very much in the public sphere. David Ellison’s Paramount will now proceed with its superior offer of $31 a share in cash for David Zaslav’s WBD in a deal worth a whopping $111 billion. Netflix exits the scene with a cool $2.8B termination fee, paid by Paramount.
If it completes, the deal will bring together two giant movie studios, huge production capabilities, cable, news networks and sports, all over the world. Our round-up of international reaction can be found here.
Watching the ins and outs of the bidding process with plenty of interest have been lawmakers and regulators on the other side of the pond. This is partly due to Donald Trump‘s ever-changing relationship with the EU. Trump feels intrinsically linked to the Paramount-WBD buy — he seems to have commented at every step of the journey and his son-in-law Jared Kushner previously backed Paramount’s hostile bid before pulling out — and many we speak with feel trade relations between the U.S. and Europe could influence EU regulation of the deal.
In an unusual move, the European Commission was reported by Bloomberg recently to have started its pre-notification probes of both Paramount and Netflix’s rival bids for WBD, before one had been accepted over the other.
While a commission spokeswoman told Deadline “this transaction has not been formally notified to the Commission,” the expectation from a merger of this size has always been that the EU will take a look, with its sheer size, distribution, sports rights and the funding behind the deal all potentially in play to European regulators.
According to François Godard, a media and telecoms analyst at Enders Analysis, the $71B Disney-Fox deal from late last decade, which was waved through by the EU but examined minutely, sets the closest recent precedent for Hollywood M&A in the continent.
“It is difficult to see this deal collapsing because of Europe saying no,” Godard said. “But you can expect many more issues being raised by the regulator in Europe than the U.S.”
Had Netflix won out, Godard predicted the main regulatory issue could have centered on European cinema owners and the much-discussed fears around theatrical. Instead, one traditional studio is buying another, meaning the issue shifts in part to “concentration in distribution,” Godard said, hence his comparison to Disney-Fox. “European cinema owners will be very sensitive to this,” he added.
Another anonymous antitrust expert, who has worked as a competition law and regulatory policy specialist in Brussels for 30 years, said there are a “smaller number of thorny competition issues” compared with Netflix” and “more clear-cut horizontal issues that are studio-to-studio,” which “means that remedies are easier to structure and implement.”
There is little question, sources feel, that the European Commission will at least examine the takeover in some form. Companies must notify European authorities if their combined worldwide revenue exceeds €5B ($5.8B), or if their European sales total more than €250M — thresholds that will be comfortably cleared by the might of Netflix-WBD.
Cristina Caffarra, a competition economist who has advised companies including Apple and Amazon on antitrust matters in Europe, said it is highly unlikely that EU regulators will block the takeover — but they could still be influential to the tempo of the process.
If examined, there is a question over whether the probe would be treated as a shorter Phase I investigation, or longer Phase II. If the latter, Caffara said this will provide extra time for state attorneys general in the U.S. to throw wrenches in the works, should they wish to do so. Such an investigation takes at least 90 days to be completed in Europe. It involves an “in-depth analysis of the merger’s effects on competition,” according to the European Commission, which can mean “extensive information gathering including companies’ internal documents, extensive economic data, more detailed questionnaires and site visits.” The concluding decision is given as one of three outcomes: “Unconditionally clear,” “Approve subject to remedies” or “prohibit the merger.”
“The issue is whether [the EU] takes enough time to review it, in which case the States may have time to mount a challenge,” added Caffara.
Her comments came just a few hours after California Attorney General Rob Bonta told Deadline that “Paramount/Warner Bros is not a done deal.” A “full and robust review” of both Netflix and Paramount’s proposals was opened by the DoJ last week. “Further consolidation in markets that are central to American economic life does not serve our economy, consumers, or competition well,” Bonta said.
RELATED: “Not A Done Deal”: California AG Warns Paramount–WBD Merger Far From Certain
If a Phase II probe is launched in Europe, or U.S. regulators slow things down, which feels eminently plausible, then this could lead to WBD shareholders having quite the payday. As we explained in our who–gets-what analysis earlier, a daily “ticking fee” of $0.25 per quarter payable to WBD shareholders will accrue after September 30, 2026, until the consummation of the Paramount transaction. Paramount’s previous proposal (which was from February 10) saw the ticking fee starting to accrue later, after December 31, 2026. At that point, Par said the fee comes to about $650M for each quarter the transaction has not closed beyond that date.
Godard sees this as a display of confidence. The studio must be hopeful the deal will move quickly to have altered its eye-watering quarterly payments plan to WBD. “In a way it feels like Paramount felt so confident of regulatory approval that they could afford to offer this,” he added.
“Trump And The Broader Trade Relationship”
Confidence over in the States that the deal can proceed smoothly may come from a certain President Trump and his relationship to the pact. Given David Ellison’s father Larry Ellison’s close ties to Trump, this feels fair, although where Trump is concerned, it can sometimes be hard to know.
Trump and the Federal Communication Commission’s role in the future of WBD has been a constant talking point throughout these past months and POTUS of course has something of a topsy-turvy relationship with the EU. Trump has always viewed the bloc with suspicion, and the bloc has responded aggressively at times. Tariffs have been slapped by Trump over the past year and there was of course Vice President JD Vance’s inflammatory speech in which he attacked European governments for failing voters on migration and free speech, while claiming the greatest threat from the continent came not from Russia or China, but from “within.”
But relations aren’t exclusively sour — Trump has in the past few days kept EU tariff rates at 10% rather than rising to 15% — and Godard said this could have a bearing on the Paramount-WBD deal’s regulatory path, along with fear over future, worsening tariffs.
“This deal risks falling into the broader trade relationship between the U.S. and Europe,” he added. “If things between them get worse, then Europe may investigate more. If Europe feels there is a compromise like with the 15% then that may accelerate things. It’s the same with regulation of tech companies. Anything [from Europe] related to trade with the U.S. now has politics sitting on top of it.”
The anonymous antitrust expert added: “The political implications are huge and that might muddy the merger enforcement waters.”
Speaking with Deadline several weeks back for a similar analysis of Netflix-WBD’s regulatory pathway, Nicolas Petit, a professor of competition law at the European University Institute, said the “geopolitics of prohibiting a merger between two purely U.S. firms would be very tricky with all the trade war talk.”
Another industry watcher, who preferred to remain anonymous, predicted David Ellison will be spending a fair bit of his time over the coming months in Europe. He has already hit the continent for a charm offensive, meeting with the likes of French President Emmanuel Macron and UK Culture Secretary Lisa Nandy. He then placed an ad in newspapers around the world, which he described as an open letter to the creative community.
“He will be there even more than before if he feels like there is a regulatory risk,” said the industry watcher.
Other elements of of the deal that could attract interest from regulators include its financing — it is reported to be backed by a number of Middle Eastern wealth funds – along with its impact on news and sports.
On the former, Netflix co-CEO Ted Sarandos, who had been vocal in the press about the deal during the past week and had spent some time in the UK, said: “I think it’s a bad idea typically to have several sovereign wealth funds in that Paramount deal. Again, a part of the world that is not very big on the First Amendment.”
Given the money swirling around the region, if the EU chooses to probe that particular element of the deal then it will be closely scrutinized, and could act as something of a test case for future deals.
On sports rights, Godard pointed out that the combined Paramount-WBD would combine on a wealth of lucrative sports coverage that the EU may feel is worth examining. The presumption would be that streamers Paramount+ and WBD-owned TNT sports would merge, bringing together Champions League and Premier League soccer, an entity with the might to take on Sky Sports. This news in fact comes at a time when the Premier League is going more direct-to-consumer than ever, having unveiled a Netflix-style Premier League Plus app that will launch in Singapore and could be “replicated all around the world,” the league said. “To be honest, if I was the Premier League or Champions League I would be happy with Paramount-WBD because it’s less fragmentation, and fragmentation is a problem,” added Godard.
There are multiple regulatory elements to this grandest of deals, which will slowly be unpicked as the weeks go on, while observers will be keeping a keen eye on Trump’s comments regarding what comes next.
Where regulation is concerned, smoothness and speed will be on the mind of David Ellison and his team. As has become so commonplace these past few years, the actions of the inhabitants of the White House could make all the difference.
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