UK weighs intervention in Paramount-Warner Bros Discovery deal

Britain’s culture secretary said Tuesday she is considering a formal intervention in Paramount Skydance’s $110 billion takeover of Warner Bros. Discovery, citing concerns that the deal could concentrate too much control over news, entertainment and streaming services in too few hands.

Lisa Nandy said her department had written to the current and proposed owners of Warner Bros. Discovery after reviewing the transaction and consulting with the companies. The proposed merger would combine major Hollywood studios, television networks and streaming platforms, creating a company with assets including Channel 5, CNN, TNT Sports, Cartoon Network, Nickelodeon, Paramount+ and HBO Max.

“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 said in a written ministerial statement.

Nandy said her focus was on the UK public interest and the range of services available to British audiences. She pointed to the need to protect “a sufficient plurality of views in news media” and “a sufficient plurality of persons with control of the media enterprises, or the enterprises providing on-demand program services.”

The deal would place Warner Bros. Discovery, the parent company of HBO, CNN and franchises such as Batman, under the same corporate roof as Paramount Skydance, whose holdings include the CBS broadcast network, cable channels and Paramount+. In the UK, the combined company would also control Channel 5, one of the country’s four main public service broadcasters. The Guardian reported that the merged business would also include assets tied to franchises such as Superman, Batman and Top Gun, as well as TNT Sports, which broadcasts the Champions League, Premier League and the Olympics.

Nandy said existing UK law does not fully account for streaming and video-on-demand services because it was drafted when viewing was largely through traditional broadcast channels. She said she may introduce secondary legislation to allow Ofcom to examine the merger’s impact on on-demand services.

“As the legislation was drafted at a time where viewing was largely via broadcast linear channels, it does not cover the effect of a merger on streaming or video-on-demand services,” Nandy said. “I believe this ought to be able to be considered in relation to this and all future media mergers given the role on-demand viewing now plays in the market.”

Nandy has given Paramount and Warner Bros. Discovery until July 6 to respond. She emphasized that she has not made a final decision. If she proceeds, she would issue a public interest intervention notice, triggering an investigation process lasting up to 40 days.

Paramount said it did not expect UK scrutiny to derail its timetable. “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 in a statement reported by The Guardian. “We are grateful for the continued constructive engagement with all interested government bodies and relevant authorities, including in the UK.”

Separately, the UK Competition and Markets Authority is reviewing how the merger would affect competition and media consumers, with next steps expected in early August, NBC News reported.

The transaction has already cleared the U.S. Department of Justice, whose antitrust division said earlier this month that “the transaction is not likely to result in harm to competition or American consumers.” But it still faces scrutiny from state attorneys general. California Attorney General Rob Bonta has said his office is investigating the deal, and New York Attorney General Letitia James is also examining it, according to a person familiar with the matter cited by NBC News.

Paramount is run by David Ellison, son of Oracle co-founder Larry Ellison, who has backed the takeover with a $40 billion personal guarantee. The Guardian reported that three Middle East sovereign wealth funds are contributing about $24 billion to the deal, though they will not hold voting shares. The Ellison family and RedBird Capital will hold all voting control.

The merger has also drawn opposition from more than 5,500 actors, directors, producers and screenwriters, who warned in an open letter that consolidation could reduce buyers for film and television content, shrink jobs and raise consumer costs. Paramount has promoted the deal’s benefits, while Ellison has promised to put 30 movies a year in theaters.