What the EU Approach to the Warner Bros. Discovery Merger Could Teach the States

Paramount Skydance (“Paramount”) has agreed to acquire Warner Bros. Discovery (“Warner Bros.”), the media behemoth behind iconic franchises such as Looney Tunes and Hanna-Barbera. (Samuel Stolton, Guy Johnson, Tom Mackenzie, Bloomberg Law; Warner Bros.). The acquisition would value Warner Bros. at $110 billion, making it the largest deal of 2026. (White & Case). However, this merger has triggered scrutiny from state government officials who are challenging the merger on antitrust grounds. (Leah Nyle, Josh Sisco, Bloomberg Law). Other jurisdictions, such as the European Union (“EU”) have already greenlit the merger. (Samuel Stolton, Guy Johnson, Tom Mackenzie, Bloomberg Law; Tom Fish, Law360). This article provides background on the merger, explains the current state lawsuits attempting to block the merger, then outlines the EU’s approach to clearing the merger.

Two of Hollywood’s biggest studios, Paramount and Warner Bros., announced their agreement to merge in February 2026, after Netflix's initial bid to purchase Warner Bros. fell through. (Leah Nyle, Josh Sisco, Bloomberg Law). Explaining the decision, Netflix cited issues with Paramount’s proposed price for the merger, which left room for Warner Bros. to bid. Id. Paramount made a bid to wholly acquire Warner Bros. for $31 per share. Id.

While the merger is garnering approval from the U.S. federal government, California and other state attorney generals have brought lawsuits to challenge the proposed merger. (Rachel Reed, Harvard Law School). A California judge put a two-week hold on the merger while leaving open the possibility to extend. Id. Despite this, Paramount maintains that it is “work[ing] constructively with all enforcement bodies” and that the merger has already been cleared in countries such as China and Australia. (Leah Nyle, Josh Sisco, Bloomberg Law). True to their words, Paramount is now garnering approval in major European markets. (Wyatt Grantham-Phillips, PBS News). Citizens took action by filing a lawsuit in the U.S. Court for the Northern District of California. (Jack Dunn, Variety). In their complaint, the plaintiffs allege that the merger violates the Clayton Act, a federal antitrust law, and asked the court to block the merger. (Gene Maddaus, Variety). A judge dismissed the lawsuit for lack of standing but will allow the plaintiffs to refile. (Jack Dunn, Variety).

This year, EU competitive regulatory bodies created new friction for the deal. (Samuel Stolton, Guy Johnson, Tom Mackenzie, Bloomberg Law). Teresa Ribera, the EU’s Executive Vice President for a Clean, Just and Competitive Transition, has the role of keeping the EU on track with its “European Green Deal,” which targets and modernizes the EU’s competition policy. (Europa). In this role, she has expressed concerns about how the merger will impact competition in the media distribution landscape and whether creators will have options aside from the Paramount-Warner Bros. conglomerate to distribute films. (Samuel Stolton, Guy Johnson, Tom Mackenzie, Bloomberg Law). The timeline of this merger also coincides with the April 30, 2026, release of Draft Merger Guidelines from the EU. (Sullivan & Cromwell). While not codified into law, this guidance sets forth policy objectives such as consumer-benefiting efficiencies which help elucidate Paramount’s burden to clear the merger. Id. The EU’s existing merger laws give the acquiring company a chance to address initial concerns before moving the probe toward phase two. (Samuel Stolton, Guy Johnson, Tom Mackenzie, Bloomberg Law).

The merger is further complicated by funding sources. (Todd Spangler, Variety). Around $24 billion of Paramount’s cash offer will come from wealth funds in Qatar, Saudi Arabia, and Abu Dhabi. Id. This foreign funding has triggered a separate investigation under the EU’s “Foreign Subsidiaries Regulation,” an EU law passed to prevent foreign funding from distorting EU markets. (Todd Spangler, Variety; European Union).

Despite these roadblocks, EU regulators approved the merger on the condition that Paramount sever a distribution agreement with Universal Pictures in Europe. (Wyatt Grantham-Phillips, PBS News). Paramount must also refrain from entering into new agreements with Universal for the next 10 years. Id. This request follows logically from the European Green Deal’s objectives of promoting competition in the marketplace. (European Union). By requiring Paramount to sever one partnership before another is approved, the EU likely believes this will keep the media industry stable by encouraging Paramount and Discovery to remain competitors. Id. While a creative solution, it is currently unclear whether the U.S. will adopt a similar approach.

Given the sheer size of the Paramount-Warner Bros. merger, as well as both corporations’ global expanse, it is unsurprising that so many jurisdictions are suspicious of the merger’s anticompetitive impacts. The agreement with the EU signals that these studios are working closely with government officials to finalize the merger while assuaging these anticompetitive anxieties. This leaves California state action as Paramount’s latest regulatory hurdle in establishing its Paramount-Warner Bros. empire. The way that attorney general and citizen lawsuits progress will determine when, or how, Paramount achieves regulatory clearance. While it is too soon to tell how effectively the EU’s approach curbed the merger’s anticompetitive impacts, a compromise could be instructive in how states handle future, similar issues.