Paramount Warner Bros deal paused while states’ lawsuit proceeds
Paramount Skydance agreed to hold off on its $110bn Warner Bros Discovery takeover as a federal judge weighs a state challenge.
By Daniel Okafor · Business Editor
3 min read
Paramount Skydance has agreed to pause the Paramount Warner Bros deal while a federal court considers a lawsuit by states seeking to block the $110bn takeover, court papers filed Friday show. The delay matters because the company could face large daily costs if the transaction remains unfinished past a late-September deadline.
Under the filing, Paramount Skydance and Warner Bros Discovery will hold the deal until five days after US District Judge Araceli Martinez-Olguin rules on the merits of the case, or until June 1, 2027, whichever comes first. The agreement follows the judge’s earlier temporary restraining order, granted after the states asked the court to freeze the transaction for several weeks.
Why is the Paramount Warner Bros deal paused?
Twelve states, led by California, sued on July 13 to stop the merger, arguing that it would reduce competition in Hollywood and leave consumers with fewer options, especially moviegoers and cable customers. The states said the transaction would “extinguish competition,” according to Al Jazeera.
Paramount has rejected the states’ case. A company spokesperson said Paramount looks forward to proving its position at trial, and the company has previously called the claims meritless and said it would defend the merger.
New York Attorney General Letitia James, one of the officials suing to block the transaction, called the pause a “critical victory” in the effort to uphold the law and protect the film and television industries.
What could the delay cost Paramount?
Paramount Skydance could owe about $7m a day in fees to Warner Bros shareholders if the merger has not closed by September 30, according to the court filing cited by Al Jazeera. Those payments are often called ticking fees: charges tied to the passage of time when a deal remains pending beyond an agreed date.
If the case keeps the deal on hold until June 1, 2027, Paramount could owe as much as $1.7bn in those fees. Reuters, after reviewing recent merger challenges, found that similar cases have taken an average of eight months for a judge to decide.
What competition concerns are involved?
The lawsuit centers on whether combining Paramount Skydance and Warner Bros Discovery would give the merged company too much control in film, television and cable programming. Al Jazeera also reported concerns that the deal could tighten control over major news outlets because Warner Bros Discovery owns CNN and Paramount already owns CBS.
CBS has faced turmoil amid allegations of bias in favor of US President Donald Trump under Paramount CEO David Ellison, according to Al Jazeera. Ellison’s father, technology billionaire Larry Ellison, is an ally of Trump.
The court pause does not decide whether the acquisition can proceed. It keeps the companies from closing the deal while the judge considers the states’ challenge, with a final ruling or the June 2027 date setting the outside limit under the agreement described in court papers.
This story draws on original reporting from Al Jazeera.