Paramount Skydance announced a suspension of its $81 billion merger with Warner Bros. Discovery, following a federal judge's temporary restraining order that stopped the deal from closing on schedule. The pause will remain in place until a court decision or June 1, 2027, whichever comes first.
The move came after 12 state attorneys general, led by California's Rob Bonta, filed a lawsuit to block the merger on antitrust grounds. They argue the combination would reduce competition, increase prices, and harm consumers. California District Judge Araceli Martínez-Olguín highlighted the studios’ combined theatrical market share as a key reason to suspect antitrust violations. New York Attorney General Letitia James called the pause "a critical victory," while Bonta stressed, "We want no merger. That’s all we are seeking."
The legal wrangling imposes heavy costs. Paramount faces a "ticking fee" of about $650 million per quarter starting this October, payable to Warner shareholders until the deal closes. If the merger is blocked entirely or unresolved by next June, Warner can demand a $7 billion termination fee. The deadline to complete the deal is March 4, 2027, extendable to June 4 under specific conditions. Forrester Research’s VP Mike Proulx described the situation as "longer, messier, and likely more expensive."
Regulatory approval has been mostly smooth so far. The U.S. Department of Justice cleared the merger last month, noting it would enhance competition in media. The European Union, Australia, and China have also given their nod, with the U.K. decision expected soon. However, state-level antitrust challenges remain the biggest hurdle.
Media analyst Rich Greenfield noted that by skipping an upcoming preliminary injunction hearing, Paramount might actually accelerate the process, potentially speeding up the appeal timeline at the Ninth Circuit Court.
On the market front, Paramount Skydance’s stock dropped 3.3% following the announcement, while Warner Bros. Discovery shares declined by less than 1%.
