Paramount has agreed to postpone its merger with Warner Bros. Discovery until no later than June 2027 while a court evaluates a lawsuit filed by state attorneys general seeking to block the $111 billion deal. This agreement was disclosed in a legal filing on Friday and extends a previously imposed short-term pause ordered by a federal judge in California.

The merger, which has the potential to significantly reshape the Hollywood entertainment landscape, now faces a prolonged review process. The deal must be completed by June 4, 2027, or the agreement will expire. Paramount will incur a substantial financial penalty under the terms of the deal, agreeing to pay Warner Bros. Discovery shareholders $650 million for each quarter that the merger does not close starting in October.

Paramount, led by CEO David Ellison, described the delay as a strategic development aimed at accelerating judicial proceedings. The company asserted that the pause would help facilitate a trial at an earlier date and minimize ongoing disputes over procedural matters, including challenges to the court-ordered delay itself.

The arrangement is subject to the approval of U.S. District Judge Araceli Martínez-Olguín, who is presiding over the case in the Northern District of California. Paramount representatives characterized the agreement as a significant step toward demonstrating the merger's benefits for market competition, consumers, and content creators.

New York Attorney General Letitia James, one of the lead plaintiffs opposing the merger, welcomed the freeze, calling it a critical victory in the ongoing effort to prevent the transaction. The legal challenge contends that the merger could harm competition and reduce consumer choice in the media and entertainment sectors.

Both parties now await the court’s decision on whether to formally approve the extension, as the case proceeds through the judicial system.