CALIFORNIA — European Union regulators are reviewing Paramount Skydance's proposed acquisition of Warner Bros. Discovery due to its financial backing from three Middle Eastern sovereign wealth funds. The European Union confirmed its inquiry into the merger on Wednesday.
Paramount requested approval for the merger under the European Union's foreign subsidies regulation. The European Commission has set a July 7 deadline for its standard merger rules investigation and a July 14 deadline to vet the deal under foreign subsidies law. The Commission will decide by Sunday whether to approve the merger or initiate a formal investigation.
Paramount agreed to acquire Warner Bros. Discovery in February for $110 billion. An April U.S. Securities and Exchange Commission filing indicates that Saudi Arabia’s Public Investment Fund, Abu Dhabi’s L’IMAD Holding, and the Qatar Investment Authority are backing the acquisition, contributing approximately $24 billion. Paramount disclosed that foreign investors would own 49.5 percent of the merged company, with about 38.5 percent owned by the three Gulf sovereign wealth funds. Paramount stated that Middle Eastern investors will not have board representation or voting rights in the combined company.
Paramount stated that the combined company would be fully controlled by the family of Paramount Skydance chief executive officer David Ellison and RedBird Capital Partners. Mr. Ellison is the son of Oracle co-founder Larry Ellison. An open letter in April contained signatures from more than 1,000 entertainment professionals opposing the merger.
The merger also requires approval from the U.S. Department of Justice, and Paramount is lobbying the department regarding the merger. The Australian Competition and Consumer Commission approved the merger, subject to a waiting period expiring June 23, 2026. The New Zealand Commerce Commission informed Paramount Skydance that it does not intend to consider the merger further.
Paramount owns a film studio, the Paramount+ streaming service, and the CBS broadcast network. Warner Bros. Discovery owns a film studio, the HBO Max streaming service, and cable channels including CNN. The merger has received competition authority approvals in Saudi Arabia, Ukraine, Serbia, and North Macedonia. It also received foreign direct investment approvals in Germany, Slovenia, Belgium, Czechia, New Zealand, Italy, France, and Romania.