David Ellison Alberto E. Rodriguez/Getty Image Share on Facebook Share on X Google Preferred Share to Flipboard Show additional share options Share on LinkedIn Share on Pinterest Share on Reddit Share on Tumblr Share on Whats App Send an Email Print the Article Post a Comment In his pitch to Warner Bros. Discovery shareholders to accept Paramount Skydance's $108 billion hostile takeover bid, David Ellison has repeatedly argued that European regulators will never allow Netflix to buy Warner Bros. Discovery. In his Dec. 10 letter to WBD shareholders, Ellison said the Paramount buyout deal offers "a much shorter and more certain path to completion," insisting that the European Commission and the U.K.'s Competition and Markets Authority would balk at allowing the world's largest streamer to swallow one of its few global competitors. Ellison's argument hinges on Netflix's dominance in Europe. With roughly 51 percent of the continent's subscription video on-demand (SVOD) market, he characterizes Netflix's move as "a blatant attempt to eliminate one of Netflix's only viable international competitors in HBO Max." He says EU regulators would reject Netflix's preferred market definition - a broad "all internet-enabled video" category that lumps subscription streaming together with YouTube, TikTok and other platforms - and instead focus narrowly on SVOD, where Netflix's share is most pronounced. In his telling, EU laws such as the Digital Services Act and Digital Markets Act were written "for a situation precisely like this." Related Stories Movies Arthur Cohn, Three-Time Oscar-Winning Producer, Dies at 98 Movies How Guillermo del Toro Achieved His Lifelong Dream of Adapting 'Frankenstein' Not everyone agrees. The Hollywood Reporter spoke to several European antitrust experts and most believe that both Paramount's and Netflix's buyout deals would face regulatory scrutiny by the EU, but neither is likely to be stopped. "The European Commission has never blocked this kind of merger, of platform or studio concentration before. They're not going to start doing it now," says Cristina Caffarra, who has advised the Commission on major media mergers including the recent Amazon MGM buyout. The regulatory process would be long, she says, going to so-called "Phase II investigations" which can take months or even years to complete, but the EU will land on "remedies" to ensure fair competition instead of an outright ban. She points to Disney's purchase of 21st Century Fox in 2019, which cleared the EC after Disney agreed to sell off several European factual TV channels, including History and Lifetime, because these overlapped with Fox's National Geographic channels in certain EU territories. Amazon's 2022 acquisition of MGM, perhaps a closer comp to the Netflix-Warners deal, sailed through the EC unconditionally. In both cases, regulators zeroed in on specific overlaps - in channels, sports rights, or cable bundling - but seemed unconcerned by broader fears of studio consolidation, theatrical releases or streaming dominance. European media companies would likely prefer a Paramount deal. Pier Silvio Berlusconi, chief executive of pan-European broadcaster MFE-MediaForEurope, has argued a Paramount-Warners merger would boost SVOD competition. "It would mean that instead of three major over-the-top players - Netflix, Amazon and Disney- there would be four, adding another competitor for them," Berlusconi said at a press briefing at MFE's headquarters on Dec. 11. But how much Netflix's market share actually matters is also disputed. "[President] Trump raised the issue of Netflix having a high market share and HBO Max adding to that, which is true - but whether it's a regulatory issue is another matter," says Alice Enders of U.K.-based Enders Analysis. "On the internet, there are no real barriers to entry. The fact that HBO Max was able to gain market share from Netflix shows that...
It's hard to argue that Netflix and HBO would create a combination that would have an unassailable market share in streaming." Enders argues that Paramount's bid contains its own European vulnerability: The foreign money, including sovereign wealth funds from Saudi Arabia, Qatar and Abu Dhabi, and RedBird Capitol, controlled by U.A.E. deputy prime minister Sheikh Mansour, backing Ellison's Paramount Skydance bid. "Europeans have very strong hesitation about allowing foreign state investment in broadcast media," she says. "So I think something like the Netflix deal actually has lower regulatory barriers." The foreign-ownership issue is particularly sensitive in the U.K., which recently tightened its laws to prevent foreign state control of news outlets and can intervene in media mergers under national security powers. Those rules are believed to have contributed to RedBird's decision to pull out of early-stage talks to acquire ITV Studios earlier this year. While sovereign wealth backing would not automatically derail a Paramount-WBD merger, it gives regulators