Paramount Agrees to Pause $110B Warner Bros. Deal as Legal Challenges Mount

Paramount Skydance on Friday agreed to pause its $110 billion acquisition of Warner Bros. Discovery until June 1, 2027, or until five days after a trial on the deal’s legality concludes, plunging the largest media transaction of the decade into deeper uncertainty.

The agreement, announced in Oakland federal court, follows a temporary restraining order secured July 20 by a dozen state attorneys general who sued to block the merger on antitrust grounds. Shares of Paramount fell 3.3% Friday and are down 37% this year.

**Ticking Fee Adds Pressure**

The delay carries a direct financial cost. Under the merger agreement, Warner Bros. Discovery shareholders receive $31 per share in cash. If the deal has not closed by September 30, additional consideration begins accruing at a rate equivalent to 25 cents per share every 90 days, or roughly $7 million per day across outstanding shares. A wait until next June would add close to $1.7 billion to the purchase price.

Paramount could owe as much as $1.95 billion in total ticking fees under the pause agreement, according to analysis by Business Insider. The company had previously argued in court that it “would suffer very severe harm” from such fees, which amount to $650 million per quarter. If the transaction fails under specified regulatory circumstances, Paramount could also owe a $7 billion termination fee, guaranteed by Larry Ellison and his revocable trust.

The Ellison family’s deep resources have led some analysts to view the financial penalty as manageable. “It’s a lot of money in absolute dollars, but it’s not a huge deal,” Hernan Lopez of consultancy Owl & Co. told Business Insider. A $1.3 billion charge for a six-month delay would increase Paramount’s purchase price by 1.2%, annualized to 2.4% — below June’s inflation rate of 3.5%.

**Fractured Regulatory Landscape**

The deal has drawn conflicting responses from four authorities. The U.S. Department of Justice closed its eight-month investigation on June 12 without challenging the transaction, concluding it was “not likely to result in harm to competition or American consumers” in streaming, linear television, or theatrical film distribution.

A federal court in California reached the opposite preliminary conclusion on July 20, citing Paramount’s anticipated 27% share of wide-release theatrical distribution as sufficient to presume a likely antitrust violation. The European Commission cleared the deal on July 22 but required Paramount to exit its joint venture United International Pictures. Britain’s culture secretary, Lisa Nandy, has signaled possible intervention on news plurality and on-demand programming, though the country’s media law does not currently cover streaming services. Parliament’s summer recess has delayed a formal decision.

**Union Opposition**

The pause comes as SAG-AFTRA’s national board adopted a resolution opposing the merger unless it includes enforceable production guarantees. The union’s president, Sean Astin, and executive director, Duncan Crabtree-Ireland, said in a joint statement: “Our demand that the acquisition not proceed unless there are enforceable safeguards against reduced production by the studios with guarantees of increases in the percentage of productions made in the USA.”

The resolution, while largely symbolic, puts the union on record supporting antitrust lawsuits filed by the Writers Guild of America and the state attorneys general. SAG-AFTRA had not previously taken a firm position on the deal. The statement said leadership had conducted due diligence including meetings with lawyers, guild leaders, studio executives, and the Department of Justice.

**Trial Looms**

The lawsuit, filed July 13 by California and 11 other states, argues the merger would create a “media behemoth” with the power to raise prices in film and television. A preliminary injunction hearing is scheduled next week, but Paramount agreed to proceed directly to trial instead. A Reuters review of similar cases found that judges have taken an average of eight months to rule.

“We look forward to proving our case at trial,” a Paramount spokesperson said. New York Attorney General Letitia James, who is suing to block the deal, called the pause “a critical victory in our efforts to uphold the law and protect the film and television industries.”

The delay threatens to derail Paramount CEO David Ellison’s ambition to transform his company into a major rival of Netflix and Disney. The merger agreement allows Paramount to walk away under certain conditions, but would trigger a $7 billion fee. Warner Bros. Discovery would owe $3 billion if it abandons the deal.