Paramount Skydance, which earlier this year acquired media holding Warner Bros. for $111 billion. Discovery, which includes the Warner Bros. film studio. and a number of television channels, including CNN and HBO, agreed until June 2027 not to close the deal until the lawsuit is heard in a California court. In July, a coalition of prosecutors general from 12 American states appealed to a local federal court with a demand to block the merger of companies due to possible monopolization of the entertainment market.
Warner Bros. Discovery (WBD) entered into active negotiations over its sale last year and announced an agreement with streaming giant Netflix in December. Paramount Skydance, which was considered the second bidder to acquire the assets, said it would continue to try to outbid, which was ultimately successful. The deal with Paramount was approved by WBD investors in April, and in June by the US Department of Justice, which did not find any signs of a monopoly in the potential merger.
Negotiations to take over WBD have sparked controversy in the US, with US President Donald Trump calling for a change in ownership of liberal news channel CNN, which he has accused of bias. The head of Paramount Skydance is David Ellison, the son of Trump ally, billionaire Larry Ellison.
After Paramount won the bid and the deal was approved by the Department of Justice, California Attorney General Rob Bonta and 11 other colleagues from states where the Democratic Party is in power appealed to the federal court. They said their analysis highlighted the risk of job losses and a new company gaining control of nearly a third of the cable television market, as well as a similar share of the country's movie box office.
Judge Araceli Martinez-Holguin, appointed under Joe Biden, agreed to comply with the request to temporarily stop the deal for 14 days. The decision that it would ultimately be delayed for almost another year was made by Paramount and WBD themselves, who are defendants in the lawsuit. As the New York Times (NYT) notes, the initiative will also have to receive Martinez-Holguin's approval.
“We initially counted on this result – to be able to directly proceed to the trial with an evidence base. This is the simplest and clearest way to prove that this deal will benefit competition, consumers and creators. Dozens of relevant regulators around the world have already reached this conclusion,” CNBC quotes Paramount’s statement.
The plaintiffs' side also perceived the situation as their victory.
“Halting this merger while our case is pending is a key victory in our efforts to protect the law and the film and television industry. “I look forward to continuing the process to stop this illegal merger,” said New York Attorney General Letitia James, who prosecuted the case against Trump in 2024 for inflating the value of assets.
As noted by CNBC and NYT, the companies planned to close the deal in September, and the deadline in their agreement was June 4, 2027. If the deal is ultimately closed only by this date, Paramount will have, according to the terms of the agreement, to additionally pay up to $1 billion in total to WBD shareholders for this delay. Paramount shares fell 3% on news of the deal being delayed.
