Paramount Presses UK on Two Fronts: Merger Approval and Tax Break Reform
Paramount is juggling two high-stakes requests in the UK: securing approval for its proposed $110 billion merger with Warner Bros. Discovery, and pushing the government to slash the minimum spending threshold for television tax incentives.
The latter plea took center stage Wednesday at the Creative Cities Convention in Liverpool, where Paul Testar, drama commissioner for Paramount-owned Channel 5, urged ministers to reform the current high-end TV tax relief system. Under existing rules, productions qualify for a tax credit of around 25% if they cost more than £1 million ($1.36 million) per hour. Testar proposed halving that threshold to £500,000.
“Tens of millions of pounds worth of business could return to the UK if the bar is lowered,” Testar told delegates. He noted that Channel 5 has ramped up its drama output from just 12 hours in 2019 to over 100 hours projected for 2026—but much of that production has moved abroad to locations like Malta and Lithuania, where tax breaks are more generous.
Testar pointed to the network’s hit show All Creatures Great and Small, produced in Yorkshire, as an example of what’s possible when conditions align. “It has become harder to make drama generally, but we have found a way to grow every year, and we’re continuing to do so,” he said.
Channel 5’s push is not new—other executives have previously voiced similar concerns—and the broader British scripted community largely supports the call for reform. However, the UK government has so far resisted. The 2025 budget delivered no changes to tax credit thresholds, leaving industry insiders frustrated.
Meanwhile, all eyes are on the Competition and Markets Authority (CMA), which last month invited public comments on the proposed Paramount-Warner Bros. Discovery merger. The CMA’s move is seen as a preliminary step toward a deeper probe into a deal that would reshape the global media landscape. Paramount Skydance CEO David Ellison visited the UK earlier this year for a charm offensive, meeting with Culture Secretary Lisa Nandy and prominent European creatives.
Industry reactions have been mixed. Sarah Mitchell, a London-based independent producer, said: “Lowering the threshold would be a lifeline for smaller studios. Right now, we’re losing work to countries that actually want our business.” But Mark Henderson, a veteran media analyst, was blunt: “Paramount is asking for two massive favors at once. It feels like they’re trying to bully the government into submission. The merger alone raises serious competition concerns—adding tax break demands on top is tone-deaf.”
As the CMA’s review unfolds and the Treasury weighs its next move, the coming months will test whether the UK is willing to accommodate Paramount’s twin ambitions—or push back.