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Paramount Skydance agreed to delay its proposed acquisition The acquisition of Warner Bros until the end of June 2027 – a delay of several months that will eventually increase the price – as the bond faces a legal challenge.
Last week, a team of state attorneys general led by California’s Rob Bonta sued to block the deal due to antitrust concerns. On Monday, the judge hearing the case issued a temporary restraining order, bringing an imminent delay.
Paramount has repeatedly said it intends to finish the project by the end of September. The agreement announced Friday says Paramount will not complete its acquisition until the court rules on the states’ claims or until June 1, 2027, whichever comes first.
In a statement Friday, Paramount called the deal a “huge victory.”
“The result is exactly what we wanted from the beginning: a direct approach to the test based on evidence. This is a quick and clear way to prove that this transaction is good for competition, good for consumers, and good for creators, a conclusion that a number of competition authorities around the world have already reached,” said the company. “Plaintiffs’ market interpretations bear no relation to the realities of today’s market and do not stand up to scrutiny. We look forward to proving our case at trial.”
Shares of Paramount Skydance were down 3% in afternoon trading on Friday.
Under the terms of its agreement, Paramount will owe the shareholders of Warner Bros. Discovery “markup fee” if the deal is delayed for a long time, starting September 30.
The fee, 25 cents per share, each quarter until closing, is about $650 million in cash value each quarter. A delay until June 2027 would add about $1.7 billion to the deal price.
If the deal completely falls apart, Paramount will owe WBD a $7 billion breakup fee.
Paramount and WBD agreed to merge in February after the exit of the company led by David Ellison Netflix. The $110 billion deal would include two major Hollywood studios, two popular streaming services and dozens of TV networks.
In June, the antitrust division of the US Department of Justice cleared the proposed merger. Earlier this week, European antitrust regulators also gave their approval for the deal.
But US officials have expressed concern that the ban will reduce competition and result in job losses in the film industry.
“Our argument against this illegal merger is straightforward: When too few companies have too much power in the middle markets and American life, it makes things more expensive, and it makes things worse,” Bonta said in a statement on Friday. “Today’s settlement is great news for audiences, theaters, and the many people who write, create, and create the art, stories, and entertainment that so many of us enjoy. We look forward to continuing to make our case in court and celebrate another major victory in our effort to ensure that this illegal merger never sees the light of day.”
