Paramount-Warner Deal in Limbo: British Lawmakers’ Summer Break Adds Weeks of Uncertainty

Paramount’s massive $110 billion acquisition of Warner Bros. Discovery is now hanging in the balance, awaiting regulatory approval from British authorities, who are on a summer break.

Despite the UK Parliament’s recess, UK Culture Secretary Lisa Nandy has yet to announce her decision on whether to intervene in the monumental merger, which would combine iconic franchises such as Superman, SpongeBob SquarePants, and Game of Thrones.

Last month, Nandy caught many off guard, including Paramount and Warner, by expressing her inclination to possibly interfere in the merger based on concerns about media plurality.

The entertainment giants were anticipating Nandy’s decision on issuing a “public interest intervention notice,” which would prompt investigations by Ofcom, the media regulator, and the Competition and Markets Authority (CMA), the UK’s antitrust body.

Insiders at Deadline have learned that any government communications regarding the merger will be addressed to Parliament first, due to the quasi-judicial nature of the process. This leaves Paramount and Warner in a state of uncertainty until Parliament reconvenes on September 1.

Paramount did not respond to a request for comment, and the Department for Culture, Media and Sport has declined to make a statement.

The situation is further complicated by Nandy’s interest in advancing secondary legislation that would allow Ofcom to review the impact of the Paramount-WBD merger on streaming platforms, an area not currently addressed by the Enterprise Act 2002.

Nandy recognizes the urgency of making a decision, yet her failure to provide an update before Parliament’s summer recess has potentially frustrated both Paramount and WBD.

In a similar situation in 2017, when Sky was being considered by 21st Century Fox (a transaction that ultimately did not proceed), the government moved from being “minded” to intervene to actually doing so within just ten days. In contrast, Nandy has already taken 17 days.

Paramount May Proceed Without UK Approval

A mandated investigation would likely extend past Paramount’s deadline to finalize the deal by September 30. Paramount faces a “ticking fee” obligation to pay WBD shareholders about $650 million for each quarter the acquisition is delayed past the third quarter.

Despite the UK’s non-suspensory merger control regime, Paramount has expressed a commitment to adhering to the UK’s regulatory process. However, this commitment may be tested by Nandy’s prolonged decision-making.

Meanwhile, the CMA’s ongoing inquiry into the merger is set to update on August 7, potentially clearing the merger before Nandy has made her decision.

A reliable source described the situation as quite disorganized. The reasons for Nandy’s delayed decision remain unclear, but the recent change in Prime Minister probably didn’t help.

Andy Burnham will soon replace Keir Starmer as Prime Minister, and he might bring new perspectives on the merger and possibly replace Nandy as Culture Secretary. Burnham is no stranger to media issues, having previously served as Culture Secretary under Gordon Brown.

As reported by Deadline, Nandy’s unexpected announcement to possibly intervene has puzzled lawmakers and industry insiders, as there has been little opposition to Paramount’s transaction. Former UK Culture Secretary John Whittingdale expressed surprise, while another lawmaker found the intervention “somewhat baffling.”

Outside of the UK, the European Commission, the EU’s antitrust authority, is likely to approve the takeover after Paramount agreed to certain concessions. The decision is expected by Wednesday, July 22, according to a Deadline source and various reports.

In the United States, a group of attorneys general, including California’s Rob Bonta, are attempting to block the merger, arguing that it would reduce competition in several major areas, including theatrical film distribution, high-budget movies, and basic cable TV channel licensing.