Balanced Economy Project’s view on the proposed acquisition by Paramount Skydance Corporation of Warner Bros. Discovery, Inc

Paramount - Warner Bros deal: a narrow fix for a much bigger merger problem

On 22nd July, DG-COMPETITION is expected to give its decision on the Paramount-Warner Bros deal. Meanwhile, the UK Competition and Market’s Authority has also opened a merger inquiry, and is due to report on 7th August. 

Paramount has proposed commitments to address regulator concerns. Paramount’s proposed remedy is reported to involve dissolving or divesting its interest in United International Pictures (UIP), the joint venture it has run with Universal since 1981 to distribute both studios’ films outside North America. 

Balanced Economy Project usually favours structural remedies (such as a divestment or a forced breakup) over behavioural promises as a move to counteract power concentration in the market. A clean break is also easier to police than a promise about future conduct – but not when a structural remedy is too small.

Brussels and London should not treat the UIP remedy as the end of the matter. It may be structural, but its scope appears too narrow to militate problems the merger creates. If the deal strengthens the combined company across production, licensing, distribution and streaming, a limited distribution fix will be ineffective in offsetting Paramount’s enduring monopoly power.

You can read Balanced Economy’s Project full statement here.