Paramount has agreed not to close its proposed merger with Warner Bros. Discovery until Tuesday, June 1, 2027, or until shortly after the merits of lawsuits brought by state attorneys general and the Writers Guild of America are resolved.
The agreement is an extraordinary new development in the merger transaction, which has won regulatory approval from the federal government and
European regulators.
After a court filing spelling out the agreement came during the last hour of trading on Wall Street, shares in Paramount added to what was already a lackluster day. They fell 3.3% on the day to finish at $8.21 after touching a 52-week low of $8.17. The stock slid another penny in after-hours trading.
U.S. District Judge Araceli Martinez-Olguin this week granted the states a temporary restraining order pausing the transaction for 14 days to hold a hearing on whether to grant a lengthier preliminary injunction. She later extended the TRO by another 14 days, through Monday, August 17. Now both sides have indicated that they want to schedule a trial.
California Attorney General Rob Bonta, in a statement on social media, called the agreement “a major victory for a free and fair economy, for the entertainment industry, for workers, for consumers, and for affordability.” He planned to share additional thoughts with the media at a Friday (July 24) afternoon press briefing.
Hanging over the legal proceedings has been the prospect that Paramount would be on the hook to pay a $7 million-per-day “ticking fee” to Warner Bros Discovery for every day that the transaction does not close past Wednesday, September 30. The agreement opens the very real possibility that legal proceedings will extend well beyond that date. There is a $7 billion breakup fee if the deal falls apart.
In their filing in federal court Friday, the attorneys for the parties wrote, “The transaction at issue in State of California and Writers Guild shall not close, be consummated, or otherwise be completed and Defendants will not take any steps, directly or indirectly, to integrate or consolidate their operations pursuant to the Transaction until the earlier of (1) five days after the merits determination in these matters, or (2) June 1, 2027. This stipulation and order extends to Defendants’ agents, officers, servants, employees, attorneys, and other persons who are in active concert or participation with Defendants.”
A Paramount spokesperson said, “Today’s agreement is a significant win because 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. 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.”
The judge still has to sign off on the plan, but she had asked attorneys for the plaintiffs and defendants to meet to try to agree to a schedule.
In a joint statement on the agreement, the WGA West and WGA East said, “Paramount and Warner Bros. Discovery today agreed to what the state Attorneys General and the WGA both sought from the court: the merger will be put on hold pending the outcome of the states’ and the WGA’s cases or until June 1, 2027, whichever comes first. It remains our view that this merger is unlawful, and we will continue the fight to block it.”
New York Attorney General Letitia James, representing one of a dozen seeking to block the transaction, said in a statement, “From the workers and artists who bring stories to life to the families who buy tickets at the box office, Paramount’s illegal takeover of Warner Bros. is a bad deal for all those who count on a competitive entertainment industry. 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. I look forward to continuing our case to stop this illegal merger.”
The sides also agreed to scrap the current briefing schedule, as well as an August 3 hearing on the motion for a preliminary injunction. They also agreed to file a joint statement regarding the scheduling of a trial by July 31.
The state attorneys general sued July 13 to block the transaction, claiming that it would stifle competition for wide release theatrical film distribution, anticipated big budget blockbusters, and basic cable television channel licensing. The WGA filed its own suit a day later, contending that the merger would illegally limit competition for writers services.
Paramount called the state AGs lawsuit a “flawed application of the antitrust laws and is wrong on both the facts and the law. We will vigorously defend the transaction and demonstrate that this challenge is inconsistent with sound competition policy and the competitive realities of the media marketplace.”
Paramount Agrees to Postpone Warner Bros. Merger Until After Antitrust Trial
Paramount Skydance has reached an agreement with a coalition of state attorneys general to postpone the Warner Bros. Discovery merger until after an antitrust trial.
The company entered a joint stipulation in the federal case on Friday afternoon agreeing not to close the $111 billion transaction until five days after a trial is held or June 1, 2027, whichever is earlier. No trial date has been set, but the agreement likely puts the merger on hold for at least several months.
A coalition of 12 states, led by California, obtained a temporary restraining order earlier this week that blocks the merger from closing for 28 days, pending the outcome of motion for a preliminary injunction. The states allege that the deal will reduce competition in the cable and theatrical markets, and should be blocked.
“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’s attorney general, Letitia James, in a statement. “I look forward to continuing our case to stop this illegal merger.”
California Attorney General Rob Bonta, meanwhile, declared the agreement a “tremendous win.”
“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,” he said. “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.”
Norm Eisen, co-founder of the Democracy Defenders Fund and a member of the #BlocktheMerger campaign, also hailed the agreement as a victory for grassroots opposition to the deal.
“The Ellisons believed their relationship with President Trump would help them push through a disastrous deal that threatened democracy, creative freedom, and independent journalism. We in the #BlocktheMerger campaign helped prove them wrong,” he said. “This collective resistance is turning the tide.”
Paramount had been keen to close the deal before Sept. 30, when it will begin to incur a $7-million-a-day “ticking fee” to be paid to Warner Bros. investors. The agreement is a tacit acknowledgement that that will not happen, barring a settlement with the states.
Paramount previously sought a three-day hearing on the injunction motion in late August, hoping to win the judge’s blessing to close the deal sometime in early September.
But the states resisted that idea, saying they would need more time to take discovery and prepare for a full trial on the merits. The states were due to file their injunction motion on Thursday night, but held off as the two sides held discussions on a path forward.
In a statement, the company said the agreement is a “significant win.”
“Today’s agreement is a significant win because the result is exactly what we have sought from the outset: a direct path to a trial based on the evidence,” a Paramount spokesperson said. “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. 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.”
A hearing was scheduled for Aug. 3 in federal court in Oakland, at which point the two sides were expected to argue over the injunction motion. The two sides agreed to cancel that hearing.
U.S. District Judge Araceli Martinez-Olguin approved the joint stipulation on Friday afternoon, about an hour after it was entered.
The Writers Guild of America filed its own motion for an injunction earlier this week, which was also set to be heard on Aug. 3. That motion has been withdrawn, as Paramount has effectively conceded that it will not close the deal until a determination of the merits of the antitrust claims.
The parties also agreed to submit a joint stipulation by July 31 on their respective positions on trial scheduling. The states previously proposed to hold the trial in April 2027.
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