Paramount Skydance has agreed to delay its proposed acquisition of Warner Bros. Discovery to as late as June 2027 — a multi-month delay that will ultimately raise the deal price — as the tie-up faces a legal challenge.
Last week, a group of state attorneys general led by California's Rob Bonta sued to block the deal over antitrust concerns. On Monday, a judge reviewing the case issued a temporary restraining order, delivering a near-term delay.
Paramount had repeatedly said it intended to complete the transaction by the end of September. The agreement announced Friday says Paramount won't complete its acquisition until the court rules on the states' claims or until June 1, 2027, whichever comes first.
In a statement Friday, Paramount called the agreement a "significant win."
"The result is exactly what we have sought from the outset: a direct path to a trial based on the evidence. 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," the company said. "Plaintiffs' market definitions bear no relationship to the realities of today's marketplace and cannot withstand scrutiny. We look forward to proving our case at trial."
Shares of Paramount Skydance fell 3% in afternoon trading Friday.
Under the terms of its agreement, Paramount will owe Warner Bros. Discovery shareholders a "ticking fee" the longer the deal is delayed, starting Sept. 30.
The fee, an additional 25 cents per share, per quarter until closing, could amount to roughly $650 million in cash value every quarter. A delay as long as June 2027 could add roughly $1.7 billion to the deal price.
Should the deal fall apart entirely, Paramount would owe WBD a $7 billion breakup fee.
Paramount and WBD agreed to combine in February after the David Ellison-led company outbid Netflix. The $110 billion deal would bring together two major Hollywood studios, two popular streaming services and a host of TV networks.
In June, the antitrust division of the U.S. Department of Justice cleared the proposed merger. Earlier this week, European antitrust regulators likewise granted their approval for the deal.
But U.S. state officials have raised concerns that the tie-up would reduce competition and result in job losses in the film industry.
"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," Bonta said in a statement Friday. "Today's agreement is great news for audiences, movie theaters, and the many people who write, build, and create the art, news, and entertainment so many of us enjoy. We are eager to continue to make our case in court and celebrate another tremendous win in our effort to ensure this unlawful merger never sees the light of day."
