Hollywood's "Century Merger" Faces Another Obstacle! Paramount (PSKY.US) Acquisition of Warner (WBD.US) Under EU Investigation, Middle Eastern Funds under Scrutiny.

The EU is currently reviewing the acquisition of Warner Bros. Discovery (WBD.US) by Paramount Global (PSKY.US) for $110 billion according to the Foreign Subsidies Regulation (FSR). Regulatory authorities are investigating whether Middle Eastern funds provided funding for the acquisition. The EU announced on Wednesday that it will review the transaction based on relevant laws, with a preliminary deadline set for July 14. The EU had previously initiated an investigation into the transaction under standard merger rules and set July 7 as the deadline for a ruling on the transaction. After over five months of multiple bids, Paramount CEO David Ellison emerged victorious over rival Netflix, with the EU antitrust review being one of the final hurdles that must be crossed. Three Middle Eastern funds have agreed to provide approximately $24 billion in equity financing to support Paramount's acquisition plans. These three funds are the Saudi Public Investment Fund (PIF), Qatar Investment Authority, and the relatively unknown Abu Dhabi company L'Imad Holding Co. These funds are regulated by wealthy Gulf countries that have long provided significant funding for global acquisitions. For example, Apollo Global Management Inc. is one of the companies that provided billions of dollars in financing for the Paramount acquisition. Abu Dhabi's Mubadala Investment Company has maintained a long-term relationship with the Apollo group, and PIF's venture capital arm has also invested in funds managed by this US company. The FSR of the EU aims to prevent companies funded by sovereign states (such as the oil-rich Gulf countries) from distorting fair competition within the EU. If regulatory authorities identify issues, a full investigation could ultimately be launched, and Paramount may need to take remedial measures to address regulatory concerns. Paramount has refused to comment on the specifics of the FSR investigation and stated that the company has been communicating with all regulatory and enforcement agencies in a constructive and transparent manner, and will continue to do so. Previously, the EU conducted an in-depth investigation into the acquisition of the German chemical giant Covestro by the Abu Dhabi National Oil Company, a 11.7 billion deal that was eventually cleared. Regulatory Storm is Coming! Hollywood's "Merger of the Century" Faces Multiple Reviews If this massive deal that would merge two Hollywood studios into one receives regulatory approval, the Ellison family will control one of the most influential media empires in the world. Paramount Global and Warner Bros. Discovery own classic films from "Casablanca" and "Harry Potter" to "Mission: Impossible"; major news networks CNN and CBS; streaming giant HBO; and dozens of cable television channels. However, this Hollywood "merger of the century" is facing numerous legal obstacles. At the end of March this year, the US Department of Justice issued subpoenas requesting information on how this merger would impact film and TV production output, content rights, streaming competition, and the cinema industry. Additionally, it was reported that California, New York, and several other states in the US are preparing to file a lawsuit to block the deal. Meanwhile, the UK Competition and Markets Authority (CMA) has officially launched an investigation into the transaction. Analysts suggest that Paramount's political connections and other factors may make it easier for them to obtain approval from US federal antitrust regulators. Paramount CEO David Ellison's father, Larry Ellison, co-founder of Oracle Corporation, has long maintained a close relationship with Trump. Insiders have revealed that Paramount is willing to sell some children's television assets if necessary to obtain approval from the EU. In addition, Paramount has submitted settlement terms to resolve antitrust investigations into the transaction by California and other states. At the time of writing, Paramount shares fell more than 3% in pre-market trading, while Warner Bros. Discovery shares rose by 0.15%.