Megadeal delay could last until June 2027 and trigger hundreds of millions of dollars in fees

By Joe Flint

Paramount said Friday it will not move forward with its merger with Warner Bros. Discovery until legal challenges to the deal are resolved or June 1, 2027, whichever comes first.

The concession is the latest blow to the $81 billion merger between entertainment giants Paramount and Warner, which is being challenged on antitrust grounds by 12 states and the Writers Guild of America, who argue the deal is anticompetitive.

Paramount's decision came after a California federal court had granted a temporary restraining order stopping the deal from closing in 28 days. A hearing on a preliminary injunction scheduled for next week -- that would have barred Paramount from closing the merger while the states' antitrust lawsuit proceeds -- has been canceled.

The potential delay in closing could prove expensive for Paramount. Its agreement with Warner includes a "ticking fee" with payments to Warner shareholders of roughly $650 million a quarter, beginning in October, until the transaction closes.

Shares in both companies dropped Friday, with Paramount closing down 3.3% and Warner falling less than 1%.

The decision to bypass the preliminary injunction hearing process could speed up the legal process.

"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," said Rich Greenfield, a media analyst with LightShed Partners.

In a statement, Paramount said "Today's agreement is a significant win because the result is exactly what we have sought from the outset: a direct path to a trial based on the evidence."

Paramount had hoped to have the deal closed this month or at least before the late fee penalty was triggered.

"The deal may still close or it may not. What we know is that the path to either outcome just got longer, messier, and likely more expensive," Forrester Research Vice President Mike Proulx said.

The combined companies would house two major movie and television studios, the CBS broadcast network, dozens of cable channels including CNN, and streaming services Paramount+ and HBO Max.

Paramount has argued that the deal will help the company better compete with streaming giants such as Netflix. It says concerns raised by the states don't reflect the realities of today's competitive landscape.

"This transaction is good for competition, good for consumers, and good for creators," Paramount said Friday, adding the "plaintiffs' market definitions bear no relationship to the realities of today's marketplace and cannot withstand scrutiny."

The states, led by California, counter the merger would result in higher prices, lower quality and less content for film and television. In her ruling granting a restraining order, U.S. District Judge Araceli Martínez-Olguín said the combination of the two film studios' market share of theatrical movies has persuaded the court "that it can presume the proposed merger is likely to violate antitrust laws."

"Our argument against this illegal merger is straightforward: When too few corporations have too much power in markets central to American life, it makes things more expensive, and it makes things worse," California Attorney General Rob Bonta said in a statement.

Other states suing to block the deal include New York, Colorado and Arizona.

Both Paramount and Bonta have previously said there had been little progress in potential concessions or changes to the deal that would satisfy both sides prior to the battle moving to court.

LightShed's Greenfield said Paramount "may have to make structural alterations that they never imagined making" to get the deal closed.

Bonta said in an interview that the states are not interested in potential remedies or asset spinoffs. "We want no merger," Bonta said. "That's all we are seeking." A Paramount spokesperson didn't respond to a request for comment.

Paramount's deadline to complete its merger with Warner is March 4, 2027. It automatically extends to June 4, 2027, if the only remaining obstacles are regulatory approvals or governmental orders, including an antitrust injunction.

The U.S. Justice Department approved the deal last month, saying it would improve competition "across the media and entertainment ecosystem." Earlier this week, the European Union also gave its blessing after Paramount agreed to minor concessions. Other approvals have come from regulatory bodies in Australia and China. The U.K. is expected to announce a decision next month.

For both Paramount and Warner, Friday's action essentially means a halt to integration efforts for the foreseeable future. Inside Paramount, frustration is building at not being able to move forward on its plans including combining the two streaming services to create a more robust platform, according to people familiar with the situation.

If the deal is ultimately blocked or the case isn't resolved by next June, Warner could force Paramount to pay a $7 billion termination fee.

Write to Joe Flint at Joe.Flint@wsj.com

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 25, 2026).

(END) Dow Jones Newswires

July 25, 2026 02:34 ET (06:34 GMT)