UK Government to Examine Mega-Merger
UK Culture Secretary Lisa Nandy has announced she is 'minded to intervene' in Paramount's $110bn (£85bn) acquisition of Warner Bros Discovery (WBD), a deal that would create a media powerhouse controlling assets such as the Hollywood studios behind Superman, Batman and Top Gun, UK broadcaster Channel 5, news channel CNN, TNT Sports, and streaming services Paramount+ and HBO Max.
In a written ministerial statement on Tuesday, Nandy said she intends to task the communications regulator Ofcom with assessing the impact on media plurality and request the Competition and Markets Authority (CMA) to investigate potential competition issues arising from the proposed merger.
Focus on UK Public Interest
'Following engagement with the parties and independent research, my department has today written to the current and proposed owners of Warner Bros Discovery on my behalf to inform them that I am minded to intervene,' Nandy stated. 'I am conscious that the proposed acquisition is global in nature. In reaching this decision, my focus has been, and will remain, on the UK public interest and the range of services available to UK audiences, including Channel 5, TNT Sports, Cartoon Network, Nickelodeon, and CNN International, as well as Paramount+ and HBO Max.'
Nandy noted that the Enterprise Act 2002 currently does not cover streaming or video-on-demand services, as it was drafted when viewing was predominantly via broadcast linear channels. She indicated she may bring forward secondary legislation to include these services in the Act, allowing Ofcom to consider the merger's impact on on-demand services.
Timeline and Next Steps
The culture secretary has given Paramount and WBD until 6 July to respond. 'It is important to note that I have not taken a final decision on intervention at this stage,' she said. If she decides to proceed, Nandy will issue a public interest intervention notice, triggering an investigation process of up to 40 days.
Paramount expressed confidence that the deal will pass UK scrutiny without significant delay. 'We are confident that our proposed transaction does not pose any media plurality issues in the UK and remain confident in our stated transaction timeline,' a spokesperson said. 'We are grateful for the continued constructive engagement with all interested government bodies and relevant authorities, including in the UK.'
Deal Structure and International Scrutiny
Paramount is led by David Ellison, whose father Larry Ellison, co-founder of Oracle and an ally of Donald Trump, has backed the takeover with a $40bn personal guarantee. Three Middle East sovereign wealth funds are providing about $24bn: Saudi Arabia's Public Investment Fund will own approximately 15%, Abu Dhabi-backed L'Imad just under 13%, and the Qatar Investment Authority about 10.6%. However, these investors hold non-voting shares, with all voting control retained by the Ellison family and US partner RedBird Capital.
Last week, reports indicated that EU regulators are likely to approve the takeover, subject to remedies being finalised between the companies and the European Commission. The commission has until 7 July to approve the deal or launch an in-depth investigation. The US Department of Justice cleared the deal earlier this month.
