Paramount-Warner megadeal faces EU scrutiny over Gulf sovereign funding
Paramount Skydance's (NASDAQ:PSKY) proposed $110 billion acquisition of Warner Bros. Discovery (NASDAQ:WBD) has come under formal scrutiny from the European Union over its financial backing from Middle Eastern sovereign wealth funds, according to a European Commission filing.
The U.S. media giant requested regulatory clearance from the EU under the bloc's newly enacted Foreign Subsidies Regulation (FSR).
The specialized legal framework gives Brussels the power to investigate and mitigate distortions in the single market caused by unfair financial assistance or state aid from non-EU nations.
The Commission, serving as the EU's primary competition enforcer, has established a provisional deadline of July 14, 2026, to complete its Phase 1 assessment.
Regulators will decide by that date whether to clear the transaction or escalate the matter into a comprehensive, 90-working-day full-scale investigation.
The megadeal relies heavily on an estimated $24 billion in capital injections from regional wealth funds, including Saudi Arabia’s Public Investment Fund (PIF), Qatar Investment Authority (QIA), and Abu Dhabi-based L’imad Holding Company.
Beyond the foreign state-aid inquiry, the entertainment merger is being concurrently reviewed under traditional EU antitrust merger control laws to evaluate overall market concentration.
Combining two of Hollywood’s "Big Five" film studios, along with expansive cable television network portfolios and streaming services, is widely expected to trigger pushback regarding media consolidation.
Sources familiar with the matter indicated that the foreign subsidy investigation is anticipated to face fewer structural hurdles than the parallel antitrust review.
To secure standard merger approval from Brussels, Paramount Skydance will likely be required to submit formal concessions, such as divesting specialized assets like a children's television channel, to mollify regional anti-competition concerns before the transaction's late 2026 closing target.
