Paramount Skydance Corp's (PSKY.US) proposed $111 billion acquisition of Warner Bros. Discovery (WBD.US) is expected to face a potential antitrust investigation in the UK within the coming weeks. The UK's Competition and Markets Authority (CMA) has already solicited feedback regarding the transaction's potential impact on consumers in the country.
The CMA stated that the call for comments is an initial step in its review process before launching a formal investigation, adding that it "expects to commence a Phase 1 investigation in the coming weeks." Paramount Skydance emerged victorious in the bidding war for Warner Bros. Discovery in February, outbidding an offer from Netflix (NFLX.US).
The merger would create a vast media empire. The combined entity would control two major film studios (Paramount and Warner Bros.), two streaming services (Paramount+ and Warner's HBO Max), two news networks (CNN and CBS), and dozens of cable television channels.
However, regulatory hurdles could prove costly for Paramount Skydance. The company agreed to a $7 billion breakup fee if regulators block the deal. Additionally, should the transaction fail to close, a "deferred fee" of 25 cents per share per quarter would be payable after September 30. Previously, Paramount Skydance paid a $2.8 billion "breakup fee" to Netflix on behalf of Warner Bros. Discovery.
A CMA spokesperson commented, "The film and TV industry contributes billions to our economy, so it is right that we assess whether deals between studios could harm competition." Interested parties have until April 27 to submit their comments to the CMA.
Comments