Paramount Skydance (PSKY) closed down 3.3% on Friday after the company announced it would pause its merger with Warner Bros. Discovery (WBD), which fell less than 1%. The $81 billion deal is now on ice until at least a court ruling — or June 1, 2027.
Paramount Skydance Corporation Class B Common Stock, PSKY
The pause follows a California federal court granting a temporary restraining order that stopped the deal from closing within 28 days. Rather than face a preliminary injunction hearing scheduled for next week, Paramount agreed with 12 state attorneys general to halt the merger while the antitrust case proceeds.
The states, led by California Attorney General Rob Bonta, argue the combined company would reduce competition, raise prices, and hurt consumers. New York AG Letitia James called the pause “a critical victory.”
California District Judge Araceli Martínez-Olguín said the two studios’ combined theatrical movie market share gave the court reason to believe the merger “is likely to violate antitrust laws.”
Bonta made the states’ position clear: “We want no merger. That’s all we are seeking.”
The delay is expensive. Paramount’s deal with Warner includes a ticking fee — payments to Warner shareholders of roughly $650 million per quarter, starting in October, until the transaction closes.
If the deal is blocked entirely or the case remains unresolved by next June, Warner could force Paramount to pay a $7 billion termination fee. Paramount’s deadline to complete the deal is March 4, 2027, with an automatic extension to June 4, 2027, under certain conditions.
Forrester Research VP Mike Proulx summed it up plainly: “The path to either outcome just got longer, messier, and likely more expensive.”
The deal has cleared several regulatory hurdles. The U.S. Justice Department approved it last month, saying it would improve competition across media. The European Union gave its blessing this week after Paramount agreed to minor concessions. Australia and China have also approved the deal. The U.K. is expected to rule next month.
Despite those wins, the state-level antitrust battle is what’s holding everything up.
Media analyst Rich Greenfield of LightShed Partners noted that skipping the preliminary injunction hearing could actually speed up the legal timeline. “Even if Paramount loses in District Court, this would accelerate the time frame for an appeal to the Ninth Circuit Court and potentially to the Supreme Court in 2027,” he said.
Greenfield also warned that Paramount “may have to make structural alterations that they never imagined making” to get the deal across the line.
Paramount, for its part, called Friday’s agreement “a significant win,” saying it provides “a direct path to a trial based on the evidence.”
The Writers Guild of America is also among those opposing the deal, alongside the 12 states.
Inside Paramount, frustration is reportedly growing as integration planning — including combining Paramount+ and HBO Max — remains on hold.
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