The EU’s Clearance of Paramount-Warner Bros Merger Is a Failure to Protect Europe's Creative Industries and Media Pluralism
Open Markets Institute Europe (OMI Europe) and the Center for Media and Digital Governance (CMDG) strongly disapproves of the European Commission's decision to conditionally clear Paramount Skydance's acquisition of Warner Bros. Discovery, warning that the move abandons Europe's cinemas, creative workers and citizens to a newly created entertainment giant.
"We've seen this story before," said Max von Thun, Director at Open Markets Institute Europe. "When Disney acquired Fox, film output fell by 40 percent despite the Commission’s conditions. There is no reason to believe Paramount-Warner will be any different. Cinemas, artists and audiences will pay the price for the European Commission’s weak conditions and failure to block such a significant, anticompetitive merger."
"The Commission had every legal tool it needed to protect media pluralism and chose not to use them. This merger hands even more control over Europe's entertainment and news to a single American conglomerate.” said Courtney Radsch, Director at CMDG. "Europeans deserve a media landscape shaped by diverse, independent voices, not by the balance sheets of media giants."
The Commission's approval comes despite months of warnings from civil society, journalists, and the film and TV industries that the deal would concentrate an unprecedented share of production, distribution and broadcasting power in the hands of one company, reducing the number of major American studios from four to three.
In the United States, twelve states have taken legal action in order to block the Paramount-Warner Bros merger. California’s Attorney General Rob Bonta, who is leading the case, called the merger unlawful and asserted that it would lead to higher prices and lower quality for audiences. In the United Kingdom, culture Secretary of State Lisa Nandy has signalled her intention to intervene in the merger, on the grounds of media plurality.
The harms of this consolidation on the creative workforce are underscored by the Writers Guild of America’s (WGA) landmark lawsuit to block the transaction. The WGA warns the merger will create a dominant buyer of talent with the power to suppress wages and worsen working conditions. This further underscores a contradiction in the EU’s actions: despite the European Commission’s new draft merger guidelines recognising labour market harms, it has failed to take into account how the merger reinforces oligopsony power.
In a submission filed in June, OMI Europe and CMDG warned that the merger would strengthen the market power held by the two powerful vertically integrated American film studios and leave workers, artists and outlets at risk of being squeezed and facing disadvantageous terms and conditions. Open Markets also highlighted that combining competing TV channels would exacerbate media concentration and threaten the quality and diversity of TV content in Europe.
At the same time, the European Board for Media Services should have issued an opinion under the European Media Freedom Act to address the risks that the merger poses to media plurality, including weakened editorial independence at outlets including CNN International and TVN Poland.
These findings had warranted an in-depth review by the Commission to assess the impact of the merger on workers and on media and verify that any remedies resolve all harms. Unfortunately, as the Commission well knows, behavioural conditions are often difficult to enforce or rendered ineffective as circumstances change. The approval will also leave the new entity free to dominate the entertainment sector and squeeze artists and outlets in a number of ways not limited by commitments.
It is disappointing to see both the European Commission and the European Media Services Board allow a merger to proceed at the expense of Europe’s creative industries, workers and media plurality. More than ever, Europe needs effective merger control that protects our competitiveness and our values.