European Regulators Assess Foreign Funding in Proposed Acquisition
Paramount Skydance Corp (NASDAQ:PSKY) has begun the process of securing European Union approval for its proposed acquisition of Warner Bros Discovery (NASDAQ:WBD), with regulators set to examine the transaction under the bloc’s foreign subsidies framework.
According to a filing with the European Commission, the U.S. media and entertainment group submitted its application on Tuesday under the EU Foreign Subsidies Regulation, legislation designed to address concerns that state-backed financial support from non-EU countries could distort competition within the European market.
Commission Faces July Deadline
The European Commission has until 14 July to determine whether the transaction can proceed without conditions or whether a more extensive investigation is required.
Should regulators decide to open a formal probe, the review process could be extended by up to 90 working days while officials conduct a deeper assessment of the deal and its funding structure.
Sovereign Wealth Funds Among Backers
The proposed acquisition has attracted financial support from several Middle Eastern sovereign wealth funds.
Among the investors backing the transaction are Saudi Arabia’s Public Investment Fund, Abu Dhabi-based L’imad Holding Company and the Qatar Investment Authority.
Their involvement has triggered scrutiny under the EU’s foreign subsidy rules, which were introduced to examine whether state-linked financing provides companies with an unfair competitive advantage when pursuing acquisitions within Europe.
Merger Review Expected to Be More Complex
In addition to the foreign subsidy assessment, the acquisition is also being reviewed under the European Union’s merger control regulations.
Industry observers expect the competition review to present a greater challenge than the subsidy investigation, with regulators likely to focus on the impact of the combined business on media and broadcasting markets across Europe.
The companies may be required to offer remedies to secure approval, potentially including the sale of certain assets such as a children’s television channel to address competition concerns.
More about Paramount Skydance
Paramount Skydance Corp is a media and entertainment company focused on film, television and streaming content. Through the proposed acquisition of Warner Bros Discovery, the company aims to expand its global content portfolio, strengthen its position in direct-to-consumer media and create a larger international entertainment platform capable of competing with major streaming and content providers worldwide.