Posted in: Cartoon Network, HBO, Max, Movies, Nickelodeon, Paramount+, TV | Tagged: paramount, Warner Bros

Paramount Would Consider Selling Nickelodeon, Cartoon Network: Report

According to Bloomberg's sources, Paramount would consider selling "some children’s TV network assets" to secure EU approval for its deal.

As David Ellison's Paramount Skydance races the clock to complete the takeover of David Zaslav's Warner Bros. Discovery before he has to start paying a pretty dramatic "ticking fee," he learned on Friday that several states may be joining together to challenge the merger (more on that below). But it's not just here in the U.S. that the deal is hitting some roadblocks, with Bloomberg reporting that Paramount Skydance "is prepared – if necessary – to divest some children's TV network assets" if it helps in getting the $110 billion deal across the finish line with the European Union. Sources report that there are hopes of avoiding that, but Paramount has concerns that EU regulators could take a serious issue with unfair competition in kids' programming.

The EU has given Paramount until July 7th to respond to the concerns, at which point the deal will either be cleared or a deeper dive will be opened (meaning more delays). If the deal were complete, Paramount Skydance Warner Bros (???) would control Paramount's Nickelodeon and Warner Bros Discovery's Cartoon Network, along with the kids programming available on Paramount+ and HBO Max. Considering nearly half of the European market for kids' programming are US-owned, the deal raises legitimate concerns. "It's certainly likely that the commission will scrutinize overlaps between Paramount and Warner Bros. Discovery in the wholesale supply of children's television channels across the region," shared Jennifer Rie, a Bloomberg Intelligence analyst. "Concerns would be raised if combined market shares exceed 40% in any country."

U.S. States Expected to Challenge Paramount/Warner Bros Deal: Report

Just when you thought Paramount Skydance and Warner Bros. Discovery were going to have a pretty smooth sailing ahead of what they're expecting to be a blessing from the Trump Administration for the two multimedia companies to merge, there might be a bit of a speed bump on the way. On Friday, Reuters reported exclusively that California, New York, and several other U.S. states are preparing to file a lawsuit to block the $110 billion deal. The lawsuit is expected to be filed "in the coming week," and the report does not include a finalized list of states that would join the lawsuit.

At the time of this writing, shares of both Warner Bros, Discovery and Paramount were down anywhere between 3% and 6%. But what's more interesting about the move by the states is how it could impact Paramount Skydance financially. As part of the deal for Warner Bros. Discovery, Ellison's company agreed to pay a fee to shareholders beginning in October if the deal was not closed by the end of September. The "ticking fee" is $0.25 per share per quarter until the deal is officially done – or about $650 million per quarter.

"We will continue to fight against any ​attempt to derail ⁠a deal that plainly benefits consumers, creators, and the industry as a whole," a Paramount Skydance spokesperson offered in response, adding that the opposition to the deal "means giving ​entrenched incumbents like Netflix an advantage they do not deserve."

Back in April, Paramount revealed that nearly 50% of the merged company would be owned by foreign investors. In a filing with the Federal Communications Commission (FCC) on Monday to seek approval for the non-U.S. ownership aspect of the deal, Paramount noted that 49.5% of the company will be owned by foreign investors, including 24% of holdings shared by three Middle East investment funds.

Paramount noted that the investors will allow the company to "compete more effectively in the provision of television broadcast services and in the broader video programming marketplace." Though Ellison's company claims that non-U.S. investors will not have a controlling vote, having news organizations CNN and CBS News run under foreign funding should raise red flags. In addition, the overall deal calls into question the legitimacy of the Trump Administration's "America First" initiative, especially given Netflix's cash offer.

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