Paramount Skydance agreed to delay its proposed acquisition of Warner Bros. Discovery to as late as June 2027, a multi-month extension that will raise the deal price. The delay follows a lawsuit filed last week by a group of state attorneys general led by California's Rob Bonta, who sued to block the transaction over antitrust concerns. On Monday, a judge reviewing the case issued a temporary restraining order, delivering a near-term delay. The agreement addresses legal challenges to the $110 billion deal that would combine two major Hollywood studios, two streaming services, and multiple TV networks.
In a statement Friday, Paramount called the agreement a "significant win." The company stated: "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." Shares of Paramount Skydance fell 3% in afternoon trading Friday.
Paramount Owes Ticking Fee Starting Sept. 30
Under the terms of its agreement, Paramount will owe Warner Bros. Discovery shareholders a "ticking fee" the longer the deal is delayed, starting Sept. 30. The fee amounts to an additional 25 cents per share per quarter until closing, which could total roughly $650 million in cash value every quarter. A delay as long as June 2027 would likely add more than $1 billion to the deal price. Should the deal fall apart entirely, Paramount would owe WBD a $7 billion breakup fee.
DOJ and European Regulators Approve Merger
In June, the antitrust division of the U.S. Department of Justice cleared the proposed merger. Earlier this week, European antitrust regulators likewise granted their approval for the deal. Paramount and WBD agreed to combine in February after the David Ellison-led company outbid Netflix.
State Officials Cite Competition and Job Loss Concerns
U.S. state officials have raised concerns that the tie-up would reduce competition and result in job losses in the film industry. "The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the U.S.," Bonta said in a statement last week announcing the states' lawsuit.
FAQ
What did Paramount Skydance agree to on Friday?
Paramount Skydance agreed to delay its proposed acquisition of Warner Bros. Discovery to as late as June 2027. The delay follows a lawsuit filed last week by state attorneys general and a temporary restraining order issued by a judge on Monday.
How much will the delay cost Paramount?
Paramount will owe Warner Bros. Discovery shareholders a ticking fee starting Sept. 30. The fee is 25 cents per share per quarter until closing, which could amount to roughly $650 million every quarter. A delay until June 2027 would likely add more than $1 billion to the deal price.
Which regulators have approved the Paramount-WBD merger?
In June, the U.S. Department of Justice antitrust division cleared the proposed merger. Earlier this week, European antitrust regulators granted their approval for the deal.
