Paramount Skydance Agrees to Pause $110 Billion Warner Bros. Deal Until Trial, Faces $1.7 Billion in Ticking Fees

Paramount Skydance Corporation has agreed to delay closing its $110 billion acquisition of Warner Bros. Discovery until after a federal judge rules on the merits of an antitrust challenge, or until June 1, 2027, whichever is earlier, according to a court stipulation filed Friday. The deal, which would combine two of Hollywood’s five major studios, two major cable TV owners, and news networks CNN and CBS, now faces a months-long legal battle that carries escalating financial penalties for the buyer.

The agreement, reached with the 12 states suing to block the merger and the Writers Guild of America, which has filed its own separate lawsuit, prevents Paramount from integrating or closing the transaction in the interim. The companies will not move forward until “five days after the merits determination in these matters,” the filing states. If no ruling is issued by June 1, 2027, the plaintiffs may seek a preliminary injunction to keep the deal blocked.

**A costly clock**

The delay comes with a price tag. Under the merger agreement, Paramount must pay Warner Bros. shareholders a “ticking consideration” of $7 million per day, or roughly $650 million per quarter, starting October 1 if the deal has not closed by September 30. If the merger remains stalled until June 2027, total ticking fees could reach approximately $1.7 billion. A Paramount spokesperson confirmed those fees are not affected by the latest development.

Behind that figure sits a larger financial exposure. If the transaction fails under specified regulatory circumstances, Paramount could owe Warner Bros. a $7 billion termination fee, according to the terms of the deal. Larry Ellison, the Oracle co-founder and father of Paramount CEO David Ellison, has personally guaranteed that fee along with $45.72 billion of the merger consideration and the $2.8 billion Paramount already paid to Netflix on Warner’s behalf, as reported by Forbes. Warner, for its part, would owe Paramount $3 billion if it walks away from the deal.

Paramount shares fell 3.3% on Friday and are down 37% year-to-date.

**A regulatory clash**

The legal battle reflects a sharp split among regulators. The U.S. Department of Justice closed its eight-month investigation on June 12, finding the deal “not likely to result in harm to competition” in streaming, linear television, and theatrical film distribution. The Trump administration approved the transaction, a decision that reportedly surprised DOJ staff lawyers who were leaning toward recommending a lawsuit to block it, according to Ars Technica.

Twelve states, led by California, sued on July 13, arguing the merger would eliminate competition and lead to higher prices for consumers. U.S. District Judge Araceli Martínez-Olguín of the Northern District of California granted a temporary restraining order on July 20, finding the deal likely to reduce competition substantially, particularly in theatrical distribution given Paramount’s anticipated 27% share of wide-release films.

“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,” said New York Attorney General Letitia James, who is suing to block the deal. California Attorney General Rob Bonta 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.”

The European Commission cleared the deal on July 22, but with a condition requiring Paramount to exit its European film distribution venture with Universal. Meanwhile, the United Kingdom is still weighing intervention. Culture Secretary Lisa Nandy told Parliament on June 30 she is “minded to intervene” on grounds of news plurality—covering CNN International and Channel 5—and on the effect on on-demand programming services. But the relevant statute does not currently cover streaming, and Nandy said she would introduce secondary legislation to change it. The House of Commons adjourned for summer recess on July 16 without a formal decision.

**Paramount’s gambit**

Paramount characterized the pause as “a significant win,” stating in a release that it provides “a direct path to a trial based on the evidence.” The company added: “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.”

Morningstar Research analyst Matthew Dolgin, quoted by TheWrap, said the move is “pretty good for” Paramount. “I think it’s unlikely this gets dragged out beyond June, so PSKY has more certainty that its ticking fee is capped at about $2 billion, and on the merits, I think it is likely to win and close the merger,” Dolgin said.

But antitrust attorney Abiel Garcia of Kesselman Brantly Stockinger noted that a trial date is unlikely to be set before the ticking fee kicks in on October 1. “Going to trial would be faster but they more than likely aren’t getting a hearing date before the ticking fee kicks in,” Garcia told TheWrap.

The Writers Guild of America, which represents thousands of entertainment professionals, vowed to continue the fight. “It remains our view that this merger is unlawful, and we will continue the fight to block it,” the WGA said in a statement.

**Political and editorial concerns**

The deal’s political dimension has drawn scrutiny, particularly because Paramount CEO David Ellison’s father, Oracle co-founder Larry Ellison, is a close ally of President Donald Trump. David Ellison hosted Trump at an “intimate” dinner during the Justice Department’s review, and CBS News, which Ellison now controls, has seen a rightward editorial shift under new editor-in-chief Bari Weiss, according to reports. More than 200 journalists, academics, and filmmakers signed a letter warning the merger could lead to “improper political meddling” at CNN, which would come under the same ownership. David Ellison has vowed that “editorial independence will absolutely be maintained,” as reported by HuffPost.

The Democracy Defenders Fund, part of the #BlocktheMerger coalition, praised the pause. “The Ellisons believed their relationship with President Trump would help them push through a disastrous deal that threatened democracy, creative freedom, and independent journalism,” co-founder Norm Eisen said in a statement obtained by TheWrap.

Both sides are required to file a joint proposal on the trial schedule by July 31. The legal fight ahead could take an average of eight months for a ruling, based on a Reuters review of recent merger challenges, meaning a decision may not come until early 2027—well after the ticking fee clock starts running.