By Shonda RhimesUnraveling the Financial Threads: EU Eyes $24 Billion Middle Eastern Investment in Media Giant Merger
Regulatory Scrutiny Intensifies: EU Commission Probes Paramount-WBD Merger Over Foreign Funding
The European Union's regulatory arm has officially launched an investigation into the proposed $111 billion merger between Paramount Skydance and Warner Bros. Discovery. Central to this inquiry is the significant financial contribution, estimated at approximately $24 billion, originating from three sovereign wealth funds based in the Middle East: Saudi Arabia, Qatar, and Abu Dhabi. The EU's examination falls under its Foreign Subsidies Regulation, with a provisional deadline of July 14 set for the initial review. This investigation runs concurrently with a separate assessment under standard merger guidelines, which has an earlier deadline of July 7.
Unveiling Ownership Structures: Foreign Investor Stakes in the Combined Media Entity
Paramount has previously disclosed that the newly formed entity, resulting from the merger of Paramount and Warner Bros. Discovery, would have a substantial 49.5% ownership by foreign investors. Specifically, the three Gulf States' sovereign wealth funds would collectively hold about 38.5% of the equity in the combined company. This disclosure has prompted concerns among U.S. Congressional Democrats, who have urged the current administration to review the proposed deal under existing foreign-ownership regulations. However, there has been no indication from the White House regarding the initiation of such a review.
Paramount's Stance: Assurances on Control Amidst International Scrutiny
A representative for Paramount declined to comment on the ongoing investigations. Paramount has consistently stated that the Middle Eastern investors involved in the deal would not be granted board representation or voting rights within the merged Paramount-WBD entity. The company asserts that the new media powerhouse would remain under the full control of the Ellison family and U.S.-based RedBird Capital Partners, aiming to alleviate concerns about foreign influence in governance and strategic decision-making.
Navigating Global Regulatory Landscapes: Diverse Responses to the Proposed Merger
In addition to the EU's probe, Paramount is actively engaging with various regulatory bodies worldwide. In the United States, Paramount continues its lobbying efforts with the Justice Department, emphasizing the pro-competitive aspects of the Warner Bros. Discovery merger. Concurrently, several state attorneys general, including California's Rob Bonta, are reportedly considering antitrust litigation to potentially block the deal. Globally, the U.K.'s Competition and Markets Authority also initiated its own investigation into the proposed merger on Tuesday.
Approvals and Exemptions: International Regulatory Decisions Shaping the Merger's Path
Despite the heightened scrutiny in some regions, the merger has received several approvals and exemptions from international competition authorities. Paramount announced in an SEC filing that the Australian Competition and Consumer Commission (ACCC) approved the merger on June 9, pending a 14-day waiting period expiring on June 23, 2026. The ACCC concluded that the deal is "unlikely to have the effect of substantially lessening competition" in Australia's film distribution market, noting that Paramount and Warner Bros. are not particularly close competitors. Furthermore, the New Zealand Commerce Commission informed Paramount Skydance on June 5 that it would not pursue further consideration of the merger, as its clearance regime is voluntary and informal clearances are not typically provided. Paramount also reported receiving approvals from competition authorities in Saudi Arabia, Ukraine, Serbia, and North Macedonia, as well as from foreign direct investment authorities in Germany, Slovenia, Belgium, Czechia, New Zealand, Italy, France, and Romania.
