A coalition of U.S. and European lawmakers has issued a stern warning, asserting that the proposed acquisition of Warner Bros. Discovery by Paramount, spearheaded by Skydance CEO David Ellison, will face intense and comprehensive regulatory scrutiny from both sides of the Atlantic. The legislators emphasized that any prior shareholder approval holds no sway over the rigorous review processes mandated by their respective governments.

In a joint letter, three members of the European Parliament – Nathalie Loiseau, Brando Benifei, and Andreas Schwab – alongside U.S. House Representatives Sam Liccardo (D-Calif.) and Deborah Ross (D-N.C.), outlined the extensive areas of concern. These include potential impacts on market definition, market share thresholds, customer substitutability, vertical integration effects, and downstream consequences within the European Internal Market, all to be examined under the EU Merger Regulation. They explicitly cautioned against any premature suggestions that the transaction would face minimal or swift regulatory approval, directly challenging earlier optimistic statements from executives and some regulators like U.S. Federal Communications Commission Chair Brendan Carr.

The lawmakers expressed significant apprehension regarding the deal’s potential to substantially reduce competition across interconnected markets, encompassing film and television production, content licensing, theatrical distribution, and streaming services. Such consolidation, they argued, could ultimately diminish consumer choice and lead to increased prices. Furthermore, the legislators raised critical questions about editorial independence, noting that shortly after Ellison’s Skydance acquired Paramount, the company purchased online publication “The Free Press” and appointed its co-founder, Bari Weiss, as CBS News’ editor-in-chief. This concern is amplified by Paramount’s recent $16 million settlement with former President Donald Trump regarding a “60 Minutes” interview with then-Vice President Kamala Harris, which included an agreement to hire an ombudsman for CBS News.

The financing structure of the proposed $31-per-share deal, which includes a substantial nearly $24 billion from Gulf state sovereign wealth funds, also drew specific attention. While Paramount has indicated these foreign entities would forgo voting rights, and the deal is not expected to trigger a mandatory review by the Committee on Foreign Investment in the U.S. (CFIUS), lawmakers voiced “serious questions” concerning national security, foreign state influence, and the potential for CFIUS scrutiny. In the European Union, the involvement of foreign sovereign wealth funds could also trigger examination under the Foreign Subsidies Regulation, reinforcing the multinational commitment to a thorough and transparent review process.