CMA launches antitrust probe into Hollywood’s mega merger
The UK’s competition watchdog has launched a formal merger enquiry into Paramount Skydance’s anticipated $110bn (£86bn) acquisition of Warner Bros Discovery, escalating the regulatory hurdles facing a deal that has already triggered a fierce, multi-front corporate war over Hollywood jobs and executive payouts.
The Competition and Markets Authority (CMA) announced Tuesday it has commenced its phase one investigation after receiving the necessary statutory filings from the parties.
The regulator has set a deadline of 7 August 2026 to determine whether the transaction threatens to cause a “substantial lessening of competition” in the UK media and entertainment market, or if it must be referred for an exhaustive phase two probe.
The probe follows a preliminary “invitation to comment” issued by the CMA in April.
Under the newly triggered statutory timetable, the watchdog will scrutinise how combining two historic Hollywood studio engines impacts British consumers, licensing markets, and theatrical distribution.
The transaction, which was overwhelmingly approved by Warner Bros Discovery (WBD) shareholders in April, aims to combine the Paramount+ and HBO Max streaming ecosystems into a unified service boasting roughly 200 million subscribers globally.
However, the path to a third-quarter closing has grown increasingly hostile as political, regulatory, and corporate friction intensifies on both sides of the Atlantic.
‘Scorched-Earth campaign’
The CMA’s announcement arrives less than 24 hours after details emerged of an aggressive legal salvo launched by Paramount Skydance against its chief streaming rival, Netflix.
In a sharply worded letter to the US Department of Justice (DOJ) this week, Paramount’s chief legal officer Makan Delrahim accused Netflix of executing a “scorched-earth campaign” to “poison regulators and other stakeholders against” the $110bn transaction.
Delrahim, a former top US antitrust official, characterised the intervention as a “panic-level response” that reveals “just how seriously Netflix takes Paramount as a scaled competitor.”
Netflix had previously won an auction to acquire WBD in late 2025, but backed out of the bidding war in February, opening the door for David Ellison’s Paramount Skydance to secure a definitive agreement.
Paramount’s letter was written to counteract growing resistance from organised labour, specifically the International Brotherhood of Teamsters, which represents 15,000 film and television workers.
The union has urged the DOJ to sue to block the deal, citing Walt Disney’s 2019 acquisition of 20th Century Fox as a precedent that led to widespread project cancellations and job cuts.
Delrahim pushed back heavily against those concerns, arguing that the transaction’s core logic is to scale up production to take on Netflix.
He reiterated Paramount’s commitments to release at least 30 theatrical films a year and expand television output, claiming that the combined engine would increase call sheets and employment opportunities for crew and location staff.
Pushback on executive pay
On Monday, influential proxy advisory firm Institutional Shareholder Services (ISS) urged WBD shareholders to vote against the proposed executive compensation and golden parachute arrangements tied to the merger.
Under the current proposals, WBD Chief Executive David Zaslav stands to receive a payout of up to $887m (£697m) if the sale goes through.
ISS described the potential payout as “extremely large,” flagging a severe “misalignment between chief executive pay and company performance.”
WBD shareholders had already registered a non-binding advisory vote against executive pay structures in April, and ISS has now recommended that investors withhold support for five members of the company’s compensation committee for failing to address shareholder anger.
Beyond the CMA’s newly launched probe, the EU’s antitrust authority is due to hand down its own decision by early July, with reports indicating Paramount has already offered to divest certain children’s television assets to placate Brussels.
Domestically, British creative bodies have also been lobbying for strict concessions, with the head of the UK’s largest cinema association warning last week that Paramount must offer “greater confidence and security” regarding exclusivity windows before backing the transaction.
Elsewhere, Paramount executives have been quietly using their UK footprint to lobby for broader regulatory relief.
Speaking at the Creative Cities Convention in Liverpool, Paul Testar, a drama commissioner for Paramount-owned Channel 5, urged the British government to halve its high-end TV tax incentive threshold from £1m to £500,000 per hour, warning that current domestic costs are forcing networks to look toward more competitive European hubs.