The UK’s Competition and Markets Authority (CMA) is investigating the anticipated joint venture (JV) between Warner Bros. Discovery, Inc. and BT Group plc. The CMA announced the launch of its ‘merger enquiry’ to each of the parties yesterday.
The UK government department states in its declaration of the opening of its case, “The CMA is considering whether it is or may be the case that this transaction if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
“To assist it with this assessment, the CMA invites comments on the transaction from any interested party.”
The deadline set by the authority for he submission of statements is 17 June. The statutory deadline by when a decision will be announced on the case is 28 July.
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The two parties confirmed the 50:50 joint venture earlier this month, a deal that would see BT receive £93 million from Warner Bros Discovery and up to approximately £540 million by way of an earn-out from the JV, subject to certain conditions being met.
The terms of the deal would see BT plc retain a 50 per cent interest in the JV, with Warner Bros Discovery granted a ‘call option’ over BT plc’s interest in the JV, which it can exercise at specified points in the first four years of the JV. If the call option is not exercised by Warner Bros Discovery, BT plc will have the ability to exit its stake in the JV either through a sale or IPO.