UK ‘considers’ intervening in Paramount’s $110 billion takeover of Warner Bros. Discovery Mergers and Acquisitions

British Culture Secretary Lisa Nandy intends to ask British media and competition watchdogs to examine Paramount’s $110 billion (£85 billion) takeover of Warner Bros. Discovery.

The WBD acquisition will create a media powerhouse that controls assets ranging from: Hollywood studios that produce franchises including Superman, Batman and Top Gun; UK Channel 5; CNN News Channel; TNT Sports, which broadcasts the Champions League, Premier League and Olympics; and streaming services Paramount+ and HBO Max.

Nandy said on Tuesday she was “considering” commissioning communications regulator Ofcom to look into the impact of the mega-merger on media pluralism, and asking the Competition and Markets Authority (CMA) to investigate whether the proposed deal creates competition issues.

“After engaging with parties and independent research, my ministry today wrote to the current and proposed owners of Warner Bros Discovery on my behalf to inform them that I am considering stepping in,” Nandy said in a written ministerial statement.

“I recognize that the proposed acquisition is global in nature. In reaching this decision, my focus has been and will continue to be on the public interest in the UK 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 said investigating public interest issues relating to live streaming was not covered in the Enterprise Act 2002, but she may legislate to allow Ofcom to investigate the impact of the merger on on-demand services.

“Since the legislation was drafted at a time when viewing was largely via linear broadcast channels, it does not cover the impact of the merger on live streaming or video-on-demand services,” she said. “I think this needs to be taken into consideration in relation to this and all future media mergers given the role on-demand viewing now plays in the market.”

Nandy said that if she decided to intervene she would introduce secondary legislation to include streaming and on-demand services in the Enterprise Code.

The Culture Minister gave Paramount and WBD until July 6 to respond. “It is important to note that I have not made a final decision about intervention at this stage,” she said.

If Nandy decides to intervene, she will issue a Public Interest Intervention Notice, which initiates an investigation process lasting up to 40 days.

Paramount said it expects the deal to clear British scrutiny without long delay. A spokesperson for the company said: “We are confident that our proposed deal does not pose any issues for our UK media mix and we remain confident in the announced timeline for the deal.” “We are grateful for the continued constructive engagement with all interested government bodies and relevant authorities, including in the UK.”

Paramount is run by David Ellison, whose father was Oracle co-founder and Donald Trump ally Larry Ellison, who backed his son’s takeover of the company with a $40 billion personal guarantee.

Three Middle Eastern sovereign wealth funds provided about $24 billion as part of the deal. The Saudi Public Investment Fund will own about 15%. Limad, an investment vehicle backed by Abu Dhabi, will own just under 13%. The Qatar Investment Authority will own about 10.6%.

However, sovereign wealth investors do not have voting shares, as the Ellison family and its US partner Red Bird Capital have all voting control.

Last week, it was reported that EU regulators are likely to approve a Paramount takeover, provided the company accepts certain solutions, which are being agreed between the companies and the European Commission.

The committee has until July 7 to approve the deal or open an in-depth investigation. The deal received approval from the US Department of Justice earlier this month.