Paramount-Warner deal stuck in UK limbo as MPs head off for summer

Paramount’s $110 billion bid for Warner Bros. Discovery is heading into a British waiting room after the House of Commons began its summer recess without a key decision from Culture Secretary Lisa Nandy, Deadline reported.

Nandy has not said whether she will formally step into the Hollywood merger on media plurality grounds. According to Deadline, any government update is expected to be made first to Parliament because the matter is being treated as a quasi-judicial process.

That timing could leave Paramount and Warner Bros. Discovery waiting until at least September 1, when Parliament is due back from its break.

The proposed tie-up would combine a deep entertainment library that includes Superman, SpongeBob SquarePants and Game of Thrones. Nandy rattled deal-watchers last month when she said she was “minded to intervene,” Deadline reported.

What Nandy’s decision could trigger

If Nandy issues a public interest intervention notice, the move would open reviews by Ofcom, the UK media regulator, and the Competition and Markets Authority, Britain’s antitrust watchdog.

Deadline reported that the process has another wrinkle: Nandy wants to consider secondary legislation that would let Ofcom look at how the deal affects streaming services. Public interest rules covering streaming are not currently included in the Enterprise Act 2002, according to the report.

Nandy is said to know a decision is needed quickly, Deadline reported, but the lack of an update before recess could frustrate Paramount and Warner Bros. Discovery. Deadline said it sought comment from Paramount.

The timetable is already slower than a previous major media case. When 21st Century Fox was pursuing Sky in 2017, the government moved from being “minded” to intervene to a formal intervention within 10 days, according to Deadline. Nandy has taken 17 days in the comparable stage.

Clock is ticking toward a September deadline

A government-ordered review would now almost certainly stretch past Paramount’s September 30 closing deadline, Deadline reported.

That date carries a price tag. The David Ellison-led company has a “ticking fee” commitment to Warner Bros. Discovery shareholders of 25 cents a share, about $650 million, for every quarter the takeover is not completed after the third quarter, according to Deadline.

The UK review may not be able to stop the deal from closing on its own. Deadline reported that Britain’s merger control system is non-suspensory, meaning Paramount could complete the transaction without UK clearance. The company has intended to respect the UK process, the report said, but Nandy’s delay puts that stance under pressure.

The CMA’s separate merger inquiry is still running and is expected to give an update on August 7, according to Deadline. That means the antitrust regulator could, in theory, clear the transaction before Nandy has made her call.

A well-placed source described the UK situation to Deadline as a “bit of a mess.” The reason for Nandy’s delay is unclear, though Deadline reported that Britain’s political shift is unlikely to have helped.

Prime Minister Keir Starmer is set to be replaced next week by Andy Burnham, who could have his own view of the deal and could replace Nandy as culture secretary, Deadline reported. Burnham previously held the culture brief under Gordon Brown.

Outside Britain, the European Commission is minded to clear the takeover after Paramount offered concessions, Deadline reported, citing a source and multiple reports. The EU antitrust enforcer is due to decide by July 22.

In the United States, a dozen attorneys general, including California’s Rob Bonta, are trying to block the merger. They allege the deal would harm competition in wide-release theatrical distribution, big-budget blockbusters and basic cable channel licensing, according to Deadline.

This story draws on original reporting from Deadline.