Paramount-Warner Bros. Merger Under Review By Canada's Competition Bureau
Entertainment mega-deal affects film and television production, distribution and streaming, with both companies being significant players in Canada
Paramount’s $110-billion (U.S.) proposed takeover of Warner Bros.-Discovery has hit another potential obstacle, this time in Canada, with the Competition Bureau launching a review of the deal for its potential effects on film and television production and streaming markets here.
The Bureau confirms it opened the investigation on Mar. 12. The enforcement agency is mandated to review mergers when the value of involved Canadian assets or sales exceed $93 million (Canadian), or when the combined assets or revenues of the parties from or into Canada exceed $400 million. It can also voluntarily review deals that don’t meet those criteria.
A Bureau spokesperson would not comment on which of those two situations apply, though industry observers familiar with the deal say the proposed acquisition likely surpasses the required thresholds.
“When you consider all the assets Paramount is acquiring – HBO, Warner Bros., Discovery cable and content licenses, WB theatrical distribution, WB Games, DC Comics distribution, physical offices and staff – it wouldn’t be surprising if it meets the threshold,” says one.
“The larger question is whether [the Bureau believes] it will lessen competition and require divestiture of any assets.” (Story continues below)
Los Angeles-based Paramount Skydance announced the acquisition on Feb. 27 after a protracted battle with Netflix for New York-based Warner Bros.-Discovery. The streaming giant bowed out the day before, saying that the price had gone too high.
On the one hand, the deal isn’t expected to draw much resistance from federal U.S. antitrust officials, given Paramount founder David Ellison’s ties to President Donald Trump, but state-level is a different story.
Antitrust officials in California and New York in particular have already announced they are investigating the merger’s effects on their respective entertainment industry workforces.
Both Paramount and Warner Bros. have significant operations in Canada. Paramount’s recent film and TV productions here include Paw Patrol: The Movie and the upcoming Len & Cub streaming series, while Warner Bros. has produced The Last of Us and many of its DC Comics television and film properties, including Arrow and Suicide Squad, in Canada. Warner Bros. also maintains a games studio in Montreal.
Both companies also license their films to Canadian movie theatres and are major players in streaming. HBO content makes up the core of Bell Media’s Crave, which is a “significant streaming player in Canada,” according to Convergence Research president Brahm Eiley. “Paramount+ is as well, but less so.”
Ellison has said he intends to merge Paramount+ and HBO Max, Warner Bros.’ main streaming service, so that it can better compete globally against Netflix, Disney+ and Amazon Prime Video. In response, Bell Media has said it has a long-term deal with Warner Bros. that will keep HBO content on Crave “for the foreseeable future,” though the company has not specified the exact time frame.
Paramount declined to comment on the Canadian review.
Competition advocates say the Bureau is warranted in investigating and demanding concessions or conditions if necessary.
“We’re talking about both production and consumption here,” says Keldon Bester, executive director of the Canadian Anti-Monopoly Project. “On the production side you’re removing a buyer while on the streaming side prices are already rising and consolidation isn’t a recipe to slow that down.”
The merger is also subject to possible scrutiny from Canadian Heritage Minister Marc Miller, who could implement a Cultural Sector Investment Review. Such reviews typically look into whether investments into cultural businesses by foreign entities are of net benefit to Canada. Heritage did not return a request for comment.
Despite that, at least a few competition lawyers in Toronto are doubtful that Canadian authorities will take much action on the merger.
“The Bureau would be interested in at least kicking the tires on this just to satisfy themselves,” says one. “They want to be seen at least giving it some consideration.”
“I just don’t know where they would go with it,” says another. “It seems to be one of those exercises on American mergers that Canada gets perfunctorily involved in.”