TLDR
- The EU conditionally approved Paramount’s $110 billion acquisition of Warner Bros. Discovery
- Paramount agreed to exit its stake in United International Pictures within 13 months of closing
- Paramount also agreed not to co-distribute films with NBC Universal in Europe for 10 years
- The US Justice Department cleared the deal in June, but 12 states filed a lawsuit on July 13 to block it
- A California federal judge issued a 14-day restraining order Monday, temporarily halting the deal’s close
Paramount (PSKY) stock rose 2.5% Wednesday after the European Commission gave conditional approval for its $110 billion acquisition of Warner Bros. Discovery (WBD).
Paramount Skydance Corporation Class B Common Stock, PSKY
The EU’s executive arm said approval was conditional “upon full compliance with the commitments offered by Paramount.”
To get the green light, Paramount agreed to exit its stake in United International Pictures, a European film distribution joint venture. It has 13 months from deal close to complete that divestiture.
Paramount also committed to not entering any co-distribution deal with NBC Universal for films in Europe for 10 years. It will also not transfer Warner Bros.’ films to its own theatrical distributor in the region.
EU competition regulators said the commitments “fully address the competition concerns identified by the commission by ensuring that the films of the merged entity will not be distributed jointly with those of Universal or Disney.”
Warner Bros. Discovery stock was largely unmoved on the news, trading roughly flat.
US Regulators Cleared It â States Did Not
The US Justice Department closed its own investigation in June without challenging the deal or demanding concessions. That was a clean pass.
But things got complicated on July 13, when California and 11 other states filed a lawsuit to block the merger. They argue combining two of the five largest studios would hurt competition in film and cable TV distribution.
A California federal judge issued a 14-day restraining order on Monday, preventing the companies from closing the deal for now.
That’s a real problem. The original plan was to close the deal this week.
Clock Is Ticking
If the deal doesn’t close by the end of September, Paramount faces a penalty. It must pay Warner Bros. shareholders roughly $7 million per day in late fees until closing.
That adds up fast.
Paramount originally agreed to the acquisition in February, outbidding Netflix in what turned out to be a competitive process. CEO David Ellison secured the transaction.
The deal is valued at $81 billion for the equity component, or $110 billion when including debt.
EU approval was one of the final major regulatory hurdles. With that now cleared, the focus shifts back to the US federal court.
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