Paramount, Warner Bros. Discovery Agree to Pause $111 Billion Merger Amid Legal Fight

(WS News) – Paramount and Warner Bros. Discovery have agreed to pause their $111 billion merger until June 2027, or five days after ongoing legal challenges are resolved, whichever comes first, dealing a fresh setback to the long-gestating tie-up.

The agreement, filed in federal court in California, comes as the deal faces two separate legal challenges: one from a coalition of 12 states and another from the Writers Guild of America, which represents entertainment professionals across Hollywood. Both lawsuits argue that combining Paramount and Warner Bros. Discovery would concentrate too much power in a market central to American media, raising costs and harming consumers, filmgoers, and the writers and journalists who create the underlying content. New York Attorney General Leticia James called the pause “a critical victory” in the states’ efforts to uphold the law, while California Attorney General Rob Bonta argued that excessive corporate concentration “makes things more expensive” and “makes things worse.”

The proposed merger would combine Paramount’s film studio, CBS, and Paramount+ with Warner Bros. Discovery’s HBO, CNN, Warner library, and cable networks, and follows a bidding war in which Paramount’s $31-per-share all-cash offer beat out a rival bid from Netflix. The deal previously cleared U.S. Justice Department antitrust review and worked through most European regulatory scrutiny, though it still requires sign-off from the Federal Communications Commission.

The delay carries a steep financial cost for Paramount, which must pay Warner Bros. Discovery shareholders a “ticking fee” of roughly $650 million for every 90-day period the deal remains unclosed beyond October 1, and could owe a $7 billion termination fee if the transaction fails to close by June 2027. The merger has also drawn political scrutiny given the financial backing of Paramount CEO David Ellison’s father, Oracle Chief Technology Officer Larry Ellison, a close ally of President Trump.