The UK's Competition and Markets Authority (CMA) has cleared the £85bn merger of Hollywood studios Paramount and Warner Bros, concluding that the deal does not threaten competition in the UK market.

The regulator confirmed on Wednesday that it would not pursue further investigation, stating the transaction did not "give rise to a realistic prospect of a substantial lessening of competition in the UK."

The CMA launched its inquiry into the deal on 9 June, triggered by the fact that Warner Bros' UK revenues exceed £100m.

Paramount, which is backed by billionaire Larry Ellison and his son David Ellison, prevailed over Netflix in a bidding war for the entertainment giant in February, after Netflix declined to increase its offer.

Market Landscape Assessment

The CMA determined that while the combined entity would become the UK's largest theatrical film distributor, it would still face robust competition from Sony, Universal, and Disney, as well as independent distributors.

The merger also consolidates the two companies' children's television channels, prompting concerns about potential price increases. However, the watchdog dismissed these fears, citing the decline in demand for paid children's TV as audiences shift toward free-to-air broadcasters such as the BBC and streaming platform content.

Bringing together the streaming services Paramount+, HBO Max, and Discovery+ under a single corporate umbrella had sparked worries about diminished consumer choice. The CMA noted, however, that the UK streaming market remains highly competitive, with established platforms including Netflix, Amazon Prime, and Disney Plus unlikely to cede viewership to the newly combined media group.

The ruling removes a UK competition hurdle, but the merger still faces broader scrutiny over how a larger combined media group will fit into an entertainment market already shaped by major studios, subscription services and free-to-air broadcasters. For UK audiences, the CMA's focus on distribution, children's channels and streaming reflects the parts of the sector regulators say matter most for access and choice.

In its formal decision, the CMA stated: "The CMA does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the UK. Accordingly, the merger will not be referred to a phase two investigation."

Political Context

Culture Secretary Lisa Nandy, serving in the Starmer cabinet at the time, had requested the watchdog examine the acquisition in June to ensure it would not damage the UK's media landscape.

The MP for Wigan authorised both the CMA and Ofcom to assess the deal's impact, arguing it threatened the "range of services available to UK audiences."

The CMA has faced public criticism over previous interventions, notably its 2023 decision to block Microsoft's $70bn acquisition of Activision Blizzard, a ruling that was subsequently overturned.

Last year, Marcus Bokkerink was dismissed as chairman of the CMA and replaced by former Amazon executive Doug Gurr. The move surprised City advisers and was widely interpreted as a clear signal of Chancellor Rachel Reeves' intended approach to regulators.