Paramount Delays Warner Bros. Discovery Merger Amid 12-State Lawsuit

Paramount Skydance said in a Friday court filing it agreed to push back its merger with Warner Bros. Discovery, which has been challenged by 12 states, to 2027, making the concession despite the fact it could incur millions of dollars in fees for not finalizing the deal by the end of September. The merger is valued at roughly $110 billion.

Paramount voluntarily agreed to delay the merger until June 2027 or until five days after the judge makes a decision on the case, whichever comes first. Judge Araceli Martinez-Olguin issued a temporary restraining order against the merger on Monday, giving her two weeks to determine if she would issue a more stark order that pauses the deal indefinitely while the lawsuit against the merger plays out in court.

The delayed merger could cost Paramount big time, as under the terms of the deal it will have to pay a $0.25 per day “ticking fee” per share to Warner Bros. shareholders every day if the deal is not closed by Sept. 30—that fee amounts to $650 million per quarter or $7 million per day.

Paramount said its decision to delay the merger allows it to face litigation quickly in court, and said it looked forward to “proving our case at trial.” New Jersey Attorney General Jennifer Davenport said the delayed merger is “an enormous win,” reiterating the lawsuit’s concerns it would “exploit” consumers, increase cable bills and drive up the cost of movie tickets.

If the deal is dragged on until June 2027, that is how much Paramount will have to fork over in ticking fees to Warner Bros.

Mike Proulx, research director at market research firm Forrester, told Forbes in an email, “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 for the merger is “now out of Paramount’s control,” noting, the path to the deal closing or failing “just got longer, messier, and likely more expensive.”

Paramount and Netflix were the lead suitors for Warner Bros. last year, engaging in a bidding war that initially favored Netflix, which secured a $82.7 billion deal for the company’s studio and streaming assets at $27.75 per share. Paramount later offered $31 per share for the entirety of Warner Bros., leading Netflix to bow out of the bidding war. Netflix’s co-CEOs Ted Sarandos and Greg Peters said in a statement the deal “was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”

The Paramount-Warner Bros. merger was announced in February and received approval from the Justice Department in June. The merger is valued at roughly $110 billion.

Prior to the approval, billionaire Paramount chief David Ellison hosted a private dinner for President Donald Trump and his aides, adding to concerns that Ellison was using his connections to the president to fast-track his company’s deal with Warner Bros. The multi-state lawsuit against the merger was filed in June.