Paramount Skydance Corp. (Paramount Skydance (PSKY)) just cleared a big regulatory hurdle for its $110 billion acquisition of Warner Bros. Discovery (Warner Bros. Discovery (WBD)), but the celebration might be short-lived. The European Commission gave the green light on Wednesday after Paramount agreed to a key concession: it will dissolve its film distribution joint venture with Universal Pictures in Europe within 13 months of closing the deal. That joint venture, United International Pictures, had raised antitrust concerns because it effectively let Paramount and Universal coordinate on distributing each other's movies in European theaters.

To make sure competition is preserved, Paramount also committed to not entering into any film distribution agreements with Universal in Europe for 10 years. And it won't shift Warner's theatrical film distribution to its own in-house distributor. The European Commission said these commitments “fully address the competition concerns identified by the Commission by ensuring that the films of the merged entity will not be distributed jointly with those of Universal or Disney.”

Paramount noted that with the EU's approval, 65 jurisdictions have now either cleared the transaction or decided not to oppose it on competition or foreign investment grounds. Among the recent unconditional approvals: Kuwait's Competition Protection Agency, the Austrian Federal Competition Authority, and the Australian government.

But while the international picture looks rosy, the U.S. is a different story. On Monday, a federal judge temporarily blocked the merger after 12 states filed a lawsuit challenging the deal on antitrust grounds. The states argue that combining Paramount Skydance and Warner Bros. Discovery would concentrate too much power—bringing together multiple movie studios, TV networks, and streaming platforms like HBO Max and Paramount+. California Attorney General Rob Bonta called the ruling a key victory, saying the deal could reduce competition, limit opportunities, and harm consumers.

As if that weren't enough, a Paramount Skydance shareholder named Paul Robbins has filed a lawsuit alleging misconduct tied to the company's 2025 acquisition. The lawsuit names David and Larry Ellison and several board members as defendants. President Donald Trump is not a defendant but is identified as an alleged beneficiary of the claimed illegal activity. Specifically, the lawsuit alleges that the Ellisons had a side deal with Trump to “improperly funnel cash” to him to resolve legal claims and promised to remove CNN anchors disliked by the president after completing the acquisition.

So while the EU approval is a win, the merger still faces serious headwinds at home—both from regulators and in the courtroom. The next few weeks will be critical.