Paramount Agrees to Pause $110 Billion Warner Bros. Acquisition Until Mid-2027

Paramount Skydance on Friday agreed to pause its $110 billion acquisition of Warner Bros. Discovery until at least June 1, 2027, or until five days after a trial on state antitrust lawsuits is resolved, according to court filings.

The agreement extends an earlier 28-day temporary restraining order granted this week by U.S. District Judge Araceli Martínez-Olguín. Twelve states, led by California, sued on July 13 to block the merger, arguing it would reduce competition in film, television, and cable markets. The Writers Guild of America filed a separate challenge.

Under the standstill, Paramount will not take any steps to close, consummate, or integrate the deal until the earlier of a trial ruling or June 1, 2027. If the merger does not close by September 30, Paramount must pay Warner Bros. shareholders a “ticking consideration” of roughly $7 million per day — $650 million every 90 days starting Oct. 1. If delayed to June, the total fee reaches about $1.7 billion. If the deal fails to close due to regulatory issues, Paramount would owe an additional $7 billion breakup fee, according to the terms approved by Warner shareholders.

Paramount described the agreement as a strategic move to bypass preliminary hearings and proceed directly to trial. “Today’s agreement 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,” a Paramount spokesperson said in a statement. “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.”

Under the deal, the state attorneys general and the WGA agreed to withdraw their requests for preliminary injunctions. Both sides are to submit a joint statement on trial scheduling by next Friday.

California Attorney General Rob Bonta called the pause “great news for audiences, movie theaters, and the many people who write, build, and create the art, news, and entertainment so many of us enjoy.” He added: “Our argument against this illegal merger is straightforward: When too few corporations have too much power in markets central to American life, it makes things more expensive, and it makes things worse.”

New York Attorney General Letitia James, whose state is among the 12 suing, said: “Halting this merger while our case proceeds is a critical victory in our efforts to uphold the law and protect the film and television industries.”

The WGA said in a statement: “It remains our view that this merger is unlawful, and we will continue the fight to block it.”

The consolidation would unite two of Hollywood’s five legacy studios — Paramount Pictures and Warner Bros. — along with streaming services Paramount+ and HBO Max, and news operations CBS and CNN. Opponents have also raised concerns about political influence, given that Paramount CEO David Ellison is the son of Oracle co-founder Larry Ellison, a close ally of President Trump. Trump has publicly criticized CNN, which would come under the same corporate umbrella as CBS.

A Reuters review of recent merger challenges found that similar cases have taken an average of eight months for a judge to rule. Analysts said the move is a calculated gamble by Paramount to avoid prolonged procedural fights, though ticking fees are nearly unavoidable. “Even more debt will be unfortunate, but it’s almost inconsequential considering the massive numbers we’re already talking about with the total acquisition price,” Morningstar analyst Matthew Dolgin said.

Shares of Paramount Skydance fell 3.3% on Friday and are down 37% year to date. Warner Bros. Discovery shares slipped just under 1%.