Paramount Skydance Raises Guidance, Reiterates Confidence in WBD Merger as Antitrust Trial Set for March 2027

Paramount Skydance raised its full-year guidance and signaled strong confidence in its proposed $110 billion acquisition of Warner Bros. Discovery, even as a U.S. antitrust trial was set for March 2027.

The company reported second-quarter net profit of $41 million, or 18 cents per share on an adjusted basis, according to TheWrap. Revenue came in at $6.9 billion, up 1% year-over-year and slightly above Wall Street’s estimate of $6.87 billion. Adjusted earnings beat the consensus forecast of 17 cents per share, TheWrap reported. CNBC, citing LSEG, said revenue of $6.91 billion also exceeded expectations of $6.88 billion, but noted the reported EPS of 4 cents was not comparable to the adjusted estimate of 15 cents.

Paramount Skydance raised its full-year 2026 adjusted EBITDA guidance to a range of $3.8 billion to $3.9 billion, citing cost savings from the Skydance merger. It also increased its Skydance merger synergy target to $2.7 billion by year-end, TheWrap reported. Deadline said the company expects over $2.7 billion in cost savings and continues to target $3 billion-plus in efficiencies from the combination.

Streaming Gains, Linear Declines

The direct-to-consumer streaming segment was the standout performer. Revenue rose 9% to $2.47 billion, led by Paramount+, which added 2 million subscribers to reach 81.6 million globally. Streaming profit surged 44% to $366 million, according to all three sources. Paramount+ ad revenue jumped 30%, and the service recorded its lowest quarterly churn in history, driven by original series “Dutton Ranch,” UFC events, and the FIFA World Cup in parts of Latin America.

The linear TV business continued to weigh on results. TV media revenue fell 9% to $3.1 billion, with advertising revenue declining 14% and affiliate revenue down 6% as pay-TV subscribers cut the cord. The unit still posted a profit of $1.1 billion, benefiting from merger-related cost-cutting, TheWrap reported.

The studios division swung to a profit of $36 million, compared with a $31 million loss a year earlier, as revenue grew 16% to $1.3 billion, buoyed by third-party deliveries and Skydance licensing revenue. TheWrap noted lower theatrical revenue, while Deadline cited the lapping of “Mission: Impossible – The Final Reckoning” and a muted response to “Jackass: Best and Last.”

Merger on Hold, Trial Set

Paramount’s combination with Warner Bros. Discovery — a $31-per-share all-cash transaction valued at $110 billion, per Deadline — is now on hold pending a 12-day antitrust trial scheduled to begin March 2, 2027. The company has agreed to push the closing to five days after the trial’s outcome, or until June 1, 2027, whichever comes first, TheWrap reported.

CEO David Ellison told analysts on the earnings call that management remains “highly confident” in the merger closing. “We continue to believe very strongly that the combination of these two businesses create a stronger competitor that is good for Hollywood, good for consumers, and good for the creative community,” Ellison said, according to TheWrap. He added that the company is “absolutely open to finding a solution out of court, but we also really believe that we’ll win at trial.”

The delay triggers a “ticking fee” of 25 cents per Warner Bros. Discovery share per quarter starting Oct. 1, translating to roughly $650 million per quarter, or $7 million per day, TheWrap reported. By the trial start, Ellison would face at least $1 billion in ticking fees, and Paramount could incur up to approximately $190 million in external financing costs if the deal closes in June. If the deal fails due to regulatory issues, Paramount would pay a $7 billion termination fee.

CFO Dennis Cinnelli said the company’s $1.6 billion in cash and $3.2 billion in undrawn revolver capacity is sufficient to fund operations through the extended timeline, per TheWrap.

Regulatory Clearances Pile Up

The merger has received approval from the U.S. Department of Justice and the European Commission, and from regulators in 65 jurisdictions, including Australia, Brazil, China, Canada, Germany, France, Spain, and South Korea, according to Deadline’s report of Ellison’s shareholder letter. TheWrap added that clearances have also come from countries such as Austria, Saudi Arabia, and Serbia, while the U.K.’s Culture Secretary has said she is “minded to intervene.”

Separate lawsuits from a Paramount shareholder and a group of consumers were filed to block the deal, but the latter was denied a preliminary injunction, TheWrap reported.

Paramount shares initially rose after the earnings release but later reversed, trading down about 1% in late trading, according to Deadline. The stock has been pressured by merger delays.