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paramount skydance agreed to postpone the proposed acquisition of warner bros discovery The partnership is facing legal issues and is expected to be delayed until June 2027 at the latest, a delay of several months that will ultimately result in an increase in the deal price.
Last week, a group of California attorneys general led by Rob Bonta filed a lawsuit seeking to block the deal, citing antitrust concerns. On Monday, the judge reviewing the case issued a temporary restraining order, allowing for a short stay.
Paramount has repeatedly said it intends to complete the deal by the end of September. The agreement, announced Friday, states that Paramount will not complete the acquisition until the courts rule on the states’ claims or June 1, 2027, whichever comes first.
Paramount called the agreement a “significant victory” in a statement Friday.
“The outcome is exactly what we wanted from the beginning – a direct path to an evidence-based trial. This is the fastest and clearest way to prove that this deal is good for competition, for consumers and for creators, a conclusion that dozens of competition authorities around the world have already reached,” the company said. “Plaintiffs’ market definition is unrelated to today’s market realities and cannot withstand scrutiny. We look forward to proving our case in court.”
Paramount Skydance stock fell 3% in Friday afternoon trading.
Under the terms of the agreement, Paramount will be obligated to pay Warner Bros. Discovery shareholders a “ticking fee” starting Sept. 30, the longer the deal is delayed.
The fee would add 25 cents per share each quarter until closing, potentially amounting to approximately $650 million in cash per quarter. If delayed until June 2027, the transaction price could increase by about $1.7 billion.
If the deal falls apart completely, Paramount would be obligated to pay WBD a $7 billion penalty.
Paramount and WBD agreed to merge in February after David Ellison’s company won the winning bid. Netflix. The $110 billion deal brings together two of Hollywood’s biggest studios, two popular streaming services and numerous television networks.
In June, the U.S. Department of Justice’s Antitrust Division approved the proposed merger. Earlier this week, European antitrust regulators similarly approved the deal.
But U.S. state officials have expressed concerns that the partnership could reduce competition and lead to job losses in the film industry.
“Our case against this illegal merger is simple and clear: Too few companies with too much influence in a market that is central to American life makes things more expensive and 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 that so many of us enjoy. We look forward to continuing to advocate in court and celebrate another major victory in our efforts to ensure this illegal merger never sees the light of day.”
