Paramount Skydance agrees to pause merger pending antitrust case

Paramount Skydance agrees to pause merger pending antitrust case

Paramount Skydance agreed to postpone closing its merger with Warner Bros. Discovery until five days after a state antitrust case opposing the deal is resolved or until June 2027, when its merger agreement expires.

Why it matters: The move, which extends a shorter pause imposed this week by a federal judge in California, brings further uncertainty to the $110 billion mega-merger that took many months to broker in the first place.

Zoom in: In the filing, Paramount said it still believes the merger should be allowed, but has agreed to pause the deal until the legal process plays out.

  • With the update, it said the states' briefing deadlines and Aug. 3 hearing for their request for a preliminary injunction have been canceled.
  • The company added that a motion for a preliminary injunction filed by the Writers Guild of America, which opposes the deal, has also been withdrawn.
  • The judge overseeing the states' case approved the proposed delay.

    • What they're saying: Paramount spun the update as a win, saying "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 spokesperson added.
  • "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."

    • Between the lines: Paramount sees a delay as a win over a possible preliminary injunction, which the judge was weighing amid the temporary restraining order issued earlier this week.

  • If granted, the injunction could have served as an early signal that the judge thought the states' case had merit.

    • The other side: California Attorney General Rob Bonta called the agreement "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," he said in a statement.
  • New York Attorney General Letitia James also called the pause a "critical victory in our efforts to uphold the law and protect the film and television industries."

    • Catch up quick: A coalition of 12 states sued to block the merger earlier this month, arguing the deal would reduce competition among movie studios and would have too much market power over cable channels.

  • Paramount had originally said it planned to close the deal by the end of September.

    • The big picture: A delay could be costly for Paramount shareholders.

  • Paramount has promised WBD shareholders a ticking fee of 25 cents a share for every quarter the deal doesn't close by Sept. 30, totaling around $650 million per quarter.

    • What's next: The parties have until July 31 to submit joint statements in each case regarding the trial schedule.

    Editor's note: This story was updated with additional details.