The Competition and Markets Authority (CMA) has approved Paramount Skydance's proposed $110bn acquisition of Warner Bros. Discovery, concluding that the deal is unlikely to substantially reduce competition in the UK and will not be referred for an in-depth Phase 2 investigation.

The CMA's review was based on evidence from the companies, internal documents, customers and competitors, as well as responses to its public consultation. It established jurisdiction because Warner Bros. Discovery generates more than £100m in annual UK revenue.

The regulator reviewed the merger across a range of media markets, including theatrical film distribution, subscription video-on-demand (SVOD) services, audiovisual content production and licensing, and the wholesale supply of linear children's television channels.

In film distribution, the CMA acknowledged that the combined company would become the UK's largest distributor but concluded it would continue to face strong competition from major studios including Disney, Universal and Sony, as well as a number of smaller distributors.

The watchdog also dismissed concerns over the supply of SVOD services, finding that the merged business would continue to compete with established streaming platforms including, alongside broadcaster-owned services.

In July, UK Culture Secretary Lisa Nandy said she was "minded" to issue a public interest intervention notice in relation to the deal, raising the prospect that the deal could face scrutiny beyond straightforward competition analysis.

The decision removes a key UK regulatory hurdle for the transaction, with the CMA concluding that the merger does not raise a realistic prospect of a substantial lessening of competition in any UK market.

However, the situation is more complicated in the US, where although the Department of Justice (DoJ) cleared the transaction in June, a coalition of state attorneys general subsequently challenged the merger in court, creating a separate obstacle to completion.

The antitrust lawsuits challenging the acquisition are scheduled for trial beginning 2 March 2027 in federal court in California. The trial is expected to run for 12 court days through 19 March. Transaction is on hold until the earlier of five days after legal proceedings are complete or 1 June 2027.

Paramount faces substantial 'ticking fees' of $7m a day payable to WBD shareholders if closing is delayed, which could add up to as much as $1.7bn in additional payments if the transaction remains outstanding for that long.

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