Hollywood
Paramount pauses $110 billion Warner Bros deal as legal challenge clouds merger
Acquisition put on hold until court ruling, with delay costs potentially reaching $1.7 billion
New York: The blockbuster merger has hit an intermission. Paramount Skydance has agreed to pause its proposed $110 billion acquisition of Warner Bros. Discovery until a US court rules on a multistate legal challenge, adding fresh uncertainty to one of the entertainment industry’s biggest deals.
The agreement, announced on Friday, delays the transaction until at least next June or until the court delivers its verdict. While the revised timeline trims a few weeks from the legal schedule, it could prove costly for Paramount.
Under the merger agreement, Paramount may have to pay Warner Bros. Discovery shareholders up to $1.7 billion in ticking fees if the deal remains pending until next June. The company faces a charge of $7 million a day if the acquisition has not closed by September 30.
The lawsuit, filed in a federal court in Oakland by California and 11 other states on July 13, argues that the merger would create an outsized media company with the power to raise prices across the film and television industry.
“We look forward to proving our case at trial,” Paramount Skydance spokesperson said.
The states welcomed the decision to pause the deal while the case proceeds.
“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,” New York attorney general Letitia James said.
A Reuters review of recent merger litigation found that similar antitrust cases have taken an average of around eight months for judges to issue rulings, suggesting the uncertainty could persist well into 2027.
The legal battle threatens the ambitions of David Ellison, who is seeking to build Paramount into a stronger competitor to streaming giants Netflix and The Walt Disney Company.
Investors reacted cautiously to the latest development. Shares of Paramount fell 3.3 per cent on Friday and have declined 37 per cent so far this year, reflecting growing concerns over the future of the high-profile merger.
