U.S., EU lawmakers pledge European scrutiny of Paramount’s WBD deal

A group of U.S. and European lawmakers told Paramount Skydance CEO David Ellison that the company’s proposed acquisition of Warner Bros. Discovery will be subject to careful scrutiny by European regulators and that he should not consider shareholder approval of the deal to be the final word.

The three European Parliament members and two Democratic U.S. House lawmakers issued their warning in a letter sent Thursday and shared exclusively with CNBC.

“In the European Union, the European Commission and the European Parliament will closely examine market definition, market share threshold, customer substitutability, vertical integration effects, and downstream impacts in the Internal Market pursuant to the EU Merger Regulation,” they wrote.

The lawmakers noted that despite a preliminary WBD shareholder vote approving the merger last month, it is still subject to scrutiny by their respective governments. And, they warned that the merger could create new barriers to competition.

“We raise particular concern about public statements suggesting that this transaction will face minimal regulatory scrutiny or will likely receive swift approval. Such characterizations appear premature,” U.S. Reps. Sam Liccardo, D-Calif, and Deborah Ross, D-N.C., wrote alongside European Parliament members Nathalie Loiseau, Brando Benifei and Andreas Schwab.

Paramount didn’t immediately respond to an email seeking comment.

The warning comes a little over a week after Paramount’s earnings report, in which Ellison said in a letter to shareholders that “significant progress” was being made toward closing the acquisition by the end of the third quarter.

“From a strategic standpoint, we could not be more excited about the transaction. We are also on track to get this done by September of this year,” Ellison said during the company’s earnings call.

The combination would bring together powerhouse film studios in Paramount and Warner Bros. as well as two popular streaming services, a deep library of franchise content and a portfolio of TV networks that includes CBS, TNT and CNN.

“This transaction, if not fully compliant with a due authorization process and respecting all applicable legislation, could substantially lessen competition across interconnected markets, including film and television production, content licensing, theatrical distribution, and streaming services,” the lawmakers wrote. “It could, thereby reduce consumer choice and increase prices.”

The lawmakers also raised concerns about editorial independence. Shortly after Ellison’s Skydance acquired Paramount last year, the combined company bought the online publication, “The Free Press,” and named its co-founder, Bari Weiss as CBS…