The biggest media merger in years has cleared Washington. Now it has to clear Brussels — and that is where the hard questions are being asked. The European Commission, the EU's competition enforcer, has until 7 July to decide whether to approve Paramount Skydance's roughly $111bn acquisition of Warner Bros Discovery or escalate to a full investigation.
Brussels is looking at the deal on two separate tracks. The first is the conventional merger review. Regulators are weighing whether combining two Hollywood giants would shrink the options available to film and television producers — in the Commission's framing, whether the deal reduces the ability of creators to get their work made and distributed. Industry reports suggest the Commission is leaning towards clearance, but with strings: Paramount may be required to unwind its international distribution arrangement with Universal Pictures to ease concerns about concentration.
The second track is newer and potentially thornier. Under the EU's Foreign Subsidies Regulation — a tool introduced to stop state-backed money from distorting the European market — the Commission is scrutinising roughly $24bn of the financing, fronted by the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi. That review carries a provisional deadline of 14 July. It is one of the most prominent tests yet of a regulation designed for exactly this kind of situation: a deal where the decisive capital comes not from a company but from a foreign government.
The contrast with the United States is striking. The US Justice Department approved the takeover without conditions, and reporting indicates senior officials signed off before staff lawyers — said to have been leaning towards an antitrust challenge — could formally object. Where Washington stepped aside, Brussels has leaned in.
That divergence is the real story. For Paramount and Warner Bros Discovery, the EU is no longer a box to tick on the way to closing. It is the venue where the price of approval will be set, whether in divested distribution deals or in scrutiny of who, ultimately, is paying for the merger.
Europe is a smaller market for Hollywood than the US, but its regulators increasingly set the terms global companies must live by. If the Commission forces Paramount to give up the Universal arrangement or extracts concessions over the Gulf financing, it will confirm a pattern that has held across tech, data and now media: when American enforcers pull back, Brussels fills the gap. The decisions due in early July will shape not just one merger, but how far the EU is willing to use its foreign-subsidy powers to police the money behind cross-border deals.
