Paramount-Warner Deal Faces Weeks of Uncertainty

The $110 billion takeover of Warner Bros. Discovery (WBD) by Paramount is facing a prolonged period of regulatory uncertainty in Britain, where Parliament has gone into recess for the summer. The House of Commons adjourned without UK Culture Secretary Lisa Nandy providing an update on whether she will formally intervene in the Hollywood mega-merger, which will bring together a content empire that includes Superman, SpongeBob SquarePants, and Game of Thrones.

Nandy surprised Paramount, Warner, and other industry figures last month when she revealed that she was “minded to intervene” in the merger on media plurality grounds. This development has left the parties involved in a state of limbo, waiting to hear whether Nandy will issue a so-called “public interest intervention notice,” triggering investigations by media regulator Ofcom and the Competition and Markets Authority (CMA), the UK’s antitrust watchdog.

The process is further complicated by Nandy’s desire to explore bringing forward secondary legislation enabling Ofcom to examine how the Paramount-WBD deal would impact streaming services. Public interest issues relating to streaming are not currently covered under the Enterprise Act 2002.

As a result, Paramount and Warner could be in limbo until at least September 1, when Parliament returns from its summer break. This delay has been attributed to Nandy’s need to reach a decision in a timely manner, but her failure to issue an update before the summer recess could be a source of frustration for Paramount and WBD.

A well-placed source described the situation as a “bit of a mess.” It’s not clear what has delayed Nandy’s decision, but a change of Prime Minister is unlikely to have helped. Keir Starmer will next week be replaced by Andy Burnham, who may have his own thoughts on WarnerMount and could replace Nandy as culture secretary. Burnham is familiar with the media brief, having served as culture secretary in Gordon Brown’s government.

The European Commission, the EU’s antitrust enforcer, is also considering the merger. According to a Deadline source and multiple reports, the European Commission is minded to clear the takeover after Paramount agreed to make concessions. The European Commission will issue a decision by next Wednesday, July 22. In the U.S., a dozen attorneys general, including California’s Rob Bonta, are attempting to block the deal after alleging that the transaction stifles competition across wide-release theatrical film distribution, big-budget blockbusters, and basic cable television channel licensing.

Paramount has a “ticking fee” commitment to WBD shareholders of 25 cents a ​share — roughly $650M — for every quarter its takeover does not finalize beyond Q3. This matters because the David Ellison-run company has a closure deadline of September 30. As a result, Paramount’s union with Warner Bros. could close without UK clearance because Britain’s merger control regime is non-suspensory.

The CMA’s previously announced merger inquiry into the takeover continues. The CMA intends to issue an update on August 7, meaning the antitrust watchdog could theoretically clear the deal before Nandy has reached a decision. A former UK culture secretary, John Whittingdale, told Deadline that he was “surprised” by Nandy’s announcement, while another lawmaker described the intervention as “somewhat baffling.”

The UK government’s update on the merger will first be made to Parliament because it is a quasi-judicial process. This means that Paramount and Warner could be in limbo until at least September 1, when Parliament returns from its summer break. Nandy is said to be aware of the need to reach a decision in a timely manner, but her failure to issue an update before the summer recess could be a source of frustration for Paramount and WBD.

When Sky was under offer from 21st Century Fox in 2017 (a deal that never materialized), the government moved from being “minded” to intervene to launching a formal intervention within 10 days. Nandy has now taken 17 days as part of a similar process.