UK Culture Secretary Lisa Nandy intends to ask Britain’s competition and media watchdogs to examine Paramount’s $110bn (£85bn) acquisition of Warner Bros Discovery.
The WBD acquisition deal will create a media powerhouse that will control assets ranging from: the Hollywood studios behind franchises including Superman, Batman and Top Gun; UK Channel 5; the CNN news channel; TNT Sports, which broadcasts the Champions League, the Premier League and the Olympic Games; and streaming services Paramount+ and HBO Max.
Nandy said on Tuesday she was “determined” to commission communications regulator Ofcom to analyze the impact of the mega-merger on media plurality, and ask the Competition and Markets Authority (CMA) to investigate whether the proposed deal creates competition concerns.
“Following engagement with the parties and an independent investigation, my department has today written to the current and proposed owners of Warner Bros Discovery on my behalf to inform them that I am willing to intervene,” Nandy said, in a written ministerial statement.
“I am aware that the proposed acquisition is global in nature. In making this decision, my focus has been, and will continue to be, the UK public interest 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 streaming was not covered by the Enterprise Act 2002, but he could legislate to allow Ofcom to investigate the impact of the merger on on-demand services.
“As the legislation was drafted at a time when viewing was primarily via linear broadcast channels, it does not cover the effect of a merger on streaming or video-on-demand services,” he said. “I think this should be able to be considered in relation to this and all future media mergers, given the role that on-demand viewing now plays in the market.”
Nandy said that if he decided to intervene, he would introduce secondary legislation to include streaming and on-demand services in the Companies Act.
The culture secretary has given Paramount and WBD until July 6 to respond. “It is important to note that I have not made a final decision on intervention at this stage,” he said.
If Nandy decides to intervene, it will issue a public interest intervention notice, which begins an investigation process of up to 40 days.
Paramount said it hoped the deal would pass UK scrutiny without a major delay. “We are confident that our proposed transaction does not raise any media plurality issues in the UK and we remain confident in the stated transaction timeline,” a spokesperson said. “We are grateful for the continued constructive engagement with all concerned government bodies and relevant authorities, including the UK.”
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Paramount is run by David Ellison, whose father is Oracle co-founder and Donald Trump ally Larry Ellison, who backed his son’s acquisition with a $40 billion personal guarantee.
Three Middle Eastern sovereign wealth funds have contributed some $24 billion as part of the agreement. Saudi Arabia’s Public Investment fund will own about 15%; L’Imad, an Abu Dhabi-backed investment vehicle, will own just under 13%; and the Qatar Investment Authority will own around 10.6%.
However, sovereign wealth investors do not have voting shares, and the Ellison family and its US partner RedBird Capital have all voting control.
Last week, it was reported that EU regulators would likely approve the Paramount acquisition, provided the company agreed to certain solutions, which were being worked out between the companies and the European Commission.
The commission has until July 7 to approve the agreement or open an in-depth investigation. The deal won approval from the U.S. Department of Justice earlier this month.