Paramount Skydance has agreed to pause its mega-merger with Warner Bros. Discovery until five days after the antitrust cases are ruled on, or until June 1, 2027, whichever comes sooner, the company said on Friday.
Paramount is facing an antitrust lawsuit from 12 US states and a legal challenge from the Writers Guild of America.
This decision means Paramount will almost certainly head to court to defend its deal to acquire WBD, unless settlements are reached. That will likely mean a delay of months.
David Ellison’s media company had been hoping to close its WBD deal by mid-July. Paramount has agreed to pay WBD shareholders a so-called “ticking fee” of about $7 million each day the deal doesn’t close, starting after September 30. Paramount lawyer Jeffrey Kessler told the judge in a hearing that the company “would suffer very severe harm” if it had to pay the ticking fee, which is $650 million per quarter.
Some of the 12 Paramount employees Business Insider talked to earlier this week said they were worried about what a delay in the WBD deal would mean for the company’s financial health.
“I’m definitely worried about impending layoffs post-merger,” one Paramount worker said. “But I’m worried about the company as a whole if it doesn’t go through.”
A Paramount spokesperson said in a statement that this agreement “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.”
Paramount’s WBD deal has received approval from the US Department of Justice, the European Union, and other global regulators.
Forrester research director Mike Proulx said Paramount’s WBD deal “just got longer, messier, and likely more expensive.”
“I’m not sure how Paramount can frame this as a win when the deal just became more uncertain than it was 24 hours ago,” Proulx said. “The timeline is now out of Paramount’s control.”
Shares of Paramount and WBD each fell on the news. Paramount’s stock finished the day down 3.3% while WBD shares slid about 0.7%.
‘Tired of mergers and chaos’
The states suing to stop Paramount’s WBD acquisition said the deal raised antitrust concerns in three markets: wide-release film distribution, big-budget movie distribution, and cable network licensing.
With WBD, Paramount would control two top film studios in Paramount Pictures and Warner Bros. Studios; TV networks like HBO, CBS, and CNN; and streaming services Paramount+, Pluto TV, and HBO Max.
Paramount’s spokesperson said these concerns about concentration “bear no relationship to the realities of today’s marketplace and cannot withstand scrutiny,” adding that the company would “look forward to proving our case at trial.”
California Attorney General Rob Bonta said on social media that the agreement to pause the merger was “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.”
Staffers at Ellison’s company have been on edge about the WBD deal and antitrust challenges.
Some told Business Insider they believed the deal would improve their job security as Paramount grew stronger, while others thought the merger would lead to overlap that could put their roles at risk.
A pro-deal Paramount streaming employee said they “see Paramount in the same light as Spirit Airlines. Regulators didn’t let JetBlue and Spirit Airlines merge. Now Spirit is bankrupt, and JetBlue is struggling.”
A Paramount streaming staffer who didn’t like the deal said they were “tired of mergers and chaos.”
