Paramount Skydance delays Warner deal as legal battle drags on

MUMBAI: The biggest blockbuster in Hollywood is no longer playing on schedule. Paramount Skydance has agreed to delay the closing of its proposed $110 billion acquisition of Warner Bros. Discovery, pushing back one of the media industry’s largest mergers until a US court rules on a multistate antitrust lawsuit or June 2027, whichever comes first.

The agreement, disclosed in a court filing on Friday and first reported by Bloomberg, means the companies will not complete the transaction while legal proceedings remain underway, although the deal could still close earlier if the court resolves the case before the deadline.

The postponement extends uncertainty around a merger that would reshape the global entertainment landscape and create a larger competitor to streaming giants Netflix and Disney.

The financial implications could be significant for Paramount. Under the merger agreement, the company must begin paying Warner Bros. Discovery shareholders about $7 million per day if the transaction has not closed by 30 September. Should the delay stretch until June 2027, those payments could accumulate to as much as $1.7 billion.

The merger has been challenged by California and 11 other US states, which filed a lawsuit on 13 July, arguing that combining the two media companies would give the merged entity excessive market power and allow it to raise prices across the film and television industries.

“We look forward to proving our case at trial,” a Paramount spokesperson said, according to Reuters.

New York Attorney General Letitia James, one of the officials leading the legal challenge, welcomed the decision to postpone the deal, calling it “a critical victory” in efforts to uphold competition laws and protect the film and television industry while the case proceeds.

The lawsuit, filed in federal court in Oakland, California, poses a major hurdle to Paramount CEO David Ellison’s ambition to build a media company with the scale to compete more aggressively in the global streaming market.

Both sides are expected to submit proposed trial schedules by the end of July. Paramount is seeking an expedited timetable that would allow a court decision well before the June 2027 deadline, while the states had previously requested a trial beginning in April.

Under the terms of the merger agreement, the companies have until 4 June 2027 to complete the acquisition before either party can terminate the deal. If the transaction collapses after that date, Paramount would be required to pay Warner Bros. Discovery an additional $7 billion, adding further financial pressure to a merger already facing mounting legal scrutiny.

For now, Hollywood’s biggest deal remains stuck in the courtroom, where the next act will be decided by judges rather than studio executives.