The European Commission on Wednesday approved Paramount Skydance’s $110bn acquisition of Warner Bros. Discovery, conditional on Paramount unwinding its long-standing film distribution joint venture with Universal Pictures in the European Economic Area. Paramount must exit United International Pictures within 13 months of closing and is barred from any co-distribution agreement with Universal in the region for a decade. Brussels concluded that the merger, as originally structured, would have concentrated too much bargaining power in theatrical distribution, potentially harming cinema operators and consumers, but that the commitments fully resolved those concerns. The clearance adds to a growing list of jurisdictions that have signed off, including Australia, China, and Saudi Arabia.

The European decision, however, does not resolve the deal’s most immediate threat. A US federal judge in California on Monday issued a temporary restraining order blocking the transaction for at least 14 days, following a lawsuit filed by 12 state attorneys general, led by California. The states argue the merger would substantially lessen competition in film distribution and cable television, harming theatres and consumers. A hearing is scheduled for 3 August to determine whether a preliminary injunction should freeze the deal for the duration of a full trial. The US Department of Justice had previously cleared the merger in June, but the states’ challenge now places the timeline in doubt.

The financial stakes are rising. If the acquisition is not completed by 30 September, Paramount must begin paying Warner Bros shareholders a “ticking fee” of roughly $7m per day, with a $7bn termination fee payable if the deal collapses for regulatory reasons. Warner Bros shares have slipped since the court order, widening the spread to Paramount’s $31-per-share offer to its widest since the deal was announced in February. In London, the Competition and Markets Authority is conducting its own preliminary probe, with a decision due by 7 August, while the Writers Guild of America has voiced opposition, warning of wage suppression and fewer opportunities for emerging writers.

Paramount maintains that the combined entity would enhance competition by creating a counterweight to dominant streaming platforms, and has pledged to release at least 30 films in cinemas annually. The next factual milestones are the 3 August US court hearing and the UK regulator’s early-August deadline. Until those are resolved, the merger—one of the largest in media history—remains suspended between regulatory approval and judicial intervention.