EU probe into Gulf state funding complicates Paramount Skydance-WBD merger

The EU’s dual investigations introduce significant regulatory friction that could jeopardize the target closing date of September 30. If delayed, Paramount Skydance must pay a quarterly ticking fee of $0.25 per share, creating immediate financial pressure to resolve European concerns. Globally, this probe signals how the EU’s new Foreign Subsidies Regulation will be used to monitor the influence of non-Western capital in major media consolidations. Success or failure here will define the feasibility of using sovereign wealth to fund massive industry realignments. Watch for the July 7 antitrust ruling as the first indicator of whether the EC will demand asset divestitures, such as kids' networks, to allow the deal to proceed.

The European Commission's investigation is being conducted under the Foreign Subsidies Regulation (FSR), a framework that became applicable in July 2023. Per the European Commission (June 2026), the FSR was established to prevent non-EU state subsidies from distorting the internal market, particularly during large-scale acquisitions. This marks one of the first major applications of the rule within the media sector, reflecting broader European concerns regarding 'rogue media service providers' and foreign interference in critical infrastructure, as noted in previous regulatory filings and academic reviews by imec-SMIT (February 2025).

Simultaneously, a public conflict has erupted between Paramount Skydance and Netflix. Per Cord Cutters News (June 2026), Paramount Skydance’s chief legal officer, Makan Delrahim, accused Netflix of a 'scorched-earth' campaign to poison regulators against the deal. Netflix, which had its own $82.7 billion bid for WBD’s studio and streaming assets rejected in February 2026, dismissed the claim as 'absurd' via a spokesperson. Paramount Skydance further alleged that Netflix is leveraging third-party groups, including the International Brotherhood of Teamsters, to lobby against the consolidation.

Domestic pressure is also mounting in the U.S. and UK. Per IBC (June 2026), the UK’s Competition and Markets Authority (CMA) launched its Phase 1 inquiry on June 10, with a decision due by August 7. In the U.S., several states including New York and California are finalizing a lawsuit to block the merger on the grounds that it would reduce the number of major Hollywood studios to four. This consolidation has drawn 'unequivocal opposition' from a group of over 1,000 directors and executives, including Christopher Nolan and J.J. Abrams, who argue the merger will diminish content diversity and labor opportunities throughout the production ecosystem.