Paramount has agreed to pause its planned merger with Warner Bros. Discovery until the resolution of ongoing legal challenges or by June 2027, whichever occurs first. The announcement came on Friday as the companies navigate a lawsuit from multiple state attorneys general and the Writers Guild of America, who oppose the $81 billion to $111 billion deal on antitrust grounds.
The merger, which aims to combine two major entertainment firms, faces opposition from a coalition of 12 states and industry groups that argue the consolidation would reduce competition in the media and entertainment market. A federal judge in California recently imposed a temporary restraining order delaying the merger’s completion, with a preliminary injunction hearing originally scheduled for next week now canceled.
Under the terms of the agreement, Paramount would pay Warner Bros. Discovery shareholders a quarterly "ticking fee" of approximately $650 million starting in October for each quarter the deal remains unclosed. This financial penalty underscores the potential cost of the delay for Paramount, which is run by David Ellison.
Paramount and the state attorneys general have submitted a legal filing requesting the freeze while the litigation proceeds, extending the earlier court-imposed pause. The deal holds an expiration date of June 4, 2027; if it does not close by then, the agreement will lapse. The continuation of this delay is subject to approval by U.S. District Judge Araceli Martínez-Olguín, who is presiding over the case in the Northern District of California.
Paramount described the agreed delay as a strategic move to accelerate the legal process and avoid protracted disputes over procedural issues. A spokesperson for Paramount called the decision a "significant win," emphasizing that it would bring the case to trial sooner and help demonstrate the transaction’s benefits for competition, consumers, and content creators.
New York Attorney General Letitia James, one of the lead plaintiffs in the lawsuit, referred to the pause as a "crucial victory" in the ongoing legal battle.
The halt in proceedings has influenced market reactions, with shares in both companies dropping on Friday. Paramount's stock declined by 3.3%, while Warner Bros. Discovery’s shares fell by less than 1%.
Industry analysts note that the cancellation of the preliminary injunction hearing could help expedite the judicial timeline, possibly advancing an appeal to the Ninth Circuit Court and hastening a final resolution of the merger’s fate. Despite the challenges and costs associated with the delay, both parties appear to align on the need to settle the dispute swiftly through the courts.