Paramount Skydance has agreed to put its proposed merger with Warner Bros. Discovery on hold until next summer as the company faces an antitrust lawsuit by a coalition of 12 states seeking to block the $110 billion deal.
The agreement, filed in federal court Friday, prevents Paramount from completing the transaction before June 1, 2027, unless a federal judge rules on the lawsuit before that date. The agreement also eliminates an August 3 hearing on the states’ request for a preliminary injunction.
The latest development follows a series of temporary measures issued by U.S. District Judge Araceli Martínez-Olguín as the court considers the states’ case. Earlier this week, the judge issued a 14-day temporary restraining order preventing the merger from moving forward while she considered whether a longer injunction was necessary. She later extended the order through August 17.
The lawsuit, filed last week by the coalition led by California Attorney General Rob Bonta, argues that the merger violates the Clayton Act by giving the combined company too much control across key areas of the entertainment industry, including theatrical film distribution and basic cable television. The coalition estimates that the merged company would control roughly 27% of the wide-release theatrical distribution market, 30% of the blockbuster movie market, and 27% of the basic cable licensing market.
The states also argue that greater consolidation could result in fewer entertainment choices, higher prices, lower-quality content, and less competition among studios, theaters, cable companies, and consumers.
Paramount has rejected those claims and has defended the proposed merger as a way to build a stronger competitor in the industry. A company spokesperson said the lawsuit “undermines the very principles antitrust law is designed to promote.” The spokesperson added that the merger would expand consumer choice, strengthen competition, and create new opportunities for employees.
In response to the merger delay, however, a company spokesperson characterized the agreement as a major victory, saying it “is a significant win because the result is exactly what we have sought from the outset: a direct path to a trial based on the evidence.” The spokesperson also said, “This is the fastest and clearest way to prove that this transaction is good for competition, good for consumers, and good for creators, a conclusion dozens of competition authorities around the world have already reached.”
The legal delay comes with financial consequences for Paramount. Under the merger deal, Paramount must begin paying Warner Bros. Discovery shareholders a quarterly “ticking fee” if the transaction is not completed by September 30. Those payments are expected to total approximately $650 million per quarter.
If regulatory challenges ultimately prevent the merger from being completed, Paramount could also be required to pay Warner Bros. Discovery a $7 billion termination fee.
Featured image: Mario Tama/Getty Images
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