Paramount’s plan to file its USD 111bn Warner Bros takeover is still on track for a late-May, early June filing with the European Commission (EC), despite renewed opposition from complainants in the audiovisual sector, according to two sources close to the deal.

The timing of the filing is with a view to obtaining a first phase clearance in July, either unconditionally or with some remedies, the sources said.

Progress has been made in prenotification preparations such that some initial issues, for instance competition in sports channels, are no longer a concern, one of the sources said.

The companies are also optimistic that worries about overlaps in children’s programming have been assuaged such that no commitments will be necessary, one of the sources said.

That source said the parties have presented the Commission with evidence that when it comes to kids’ shows, pay TV channels like Warner Bros’ Cartoon Network and Paramount’s Nickelodeon are a “declining market” that faces fierce competition from streaming alternatives such as YouTube and Netflix.

“The stream is where all the kids’ content is now”, the source said. “Kids don’t watch pay TV any longer, they watch streaming, they watch YouTube. So the merger doesn’t change anything in their power to set prices.”

Similarly, filing plans have not been derailed by yesterday’s (21 May) letter urging the Commission to open an in depth investigation into the deal, the second source said.

That letter, which this news service has seen, urged the Commission to conduct a thorough investigation of the transaction to “assess its multiple impacts across the entire European audiovisual and cinematographic ecosystem”.

The second source said that none of the arguments in the letter are new, and said that the parties have already been “proactive” in addressing them.

“I think we have convinced the Commission that, first, this is probably not a competition concern, but second, the goal of this merger is to produce a lot of films, that is why this merger is being done. I think they have understood that now”, the second source said.

On this point, Paramount commented:

“We have proactively made clear output-enhancing commitments: to increase output to an annual 30 high-quality films released in theatres, to continue licensing content, and to preserve iconic brands with independent creative leadership. This transaction represents increased and greater competition while enabling a well-capitalized, creative-first company to invest in more projects and bring stories to audiences worldwide. It will expand opportunities for creators and enhance consumer choice, including on the big screen in Europe.”

In that regard, the opponents commented in the abovementioned letter that “[t]he future of the European industry cannot rely solely on broad promises — even if made in good faith — that evaporate once the transaction is completed and debt repayment pressures intensify – but rather on meaningful, legally binding and enforceable commitments designed to protect the whole value chain.”

The EC commented that the transaction has not been formally notified, but if it constitutes a merger and has an EU dimension, it is always up to the companies to notify it.