Paramount and Skydance agree to pause Warner Bros. merger until June 2027

Paramount Global and Skydance announced they will not move forward with their proposed $110 billion acquisition of Warner Bros. Discovery until June 1, 2027, unless a federal judge rules on an antitrust case brought by a group of Democratic state attorneys general. The agreement extends a temporary pause ordered by U.S. District Judge Araceli Martínez-Olguín of the Northern District of California.

The lawsuit, filed on July 13, alleges the merger would substantially lessen competition in theatrical film distribution, top-grossing movie releases and basic cable channel distribution, violating Section 7 of the Clayton Antitrust Act. California Attorney General Rob Bonta said the deal would "extinguish competition" in Hollywood.

"Today’s agreement is great news for audiences, movie theaters, and the many people who write, build, and create the art, news, and entertainment so many of us enjoy," Bonta said in a statement.

Paramount called the pause a "significant win" and said it provides a direct path to a trial to demonstrate that the transaction benefits competition, consumers and creators. The company’s spokesperson added that the trial will allow Paramount to prove its case.

"This is the fastest and clearest way to prove that this transaction is good for competition, good for consumers, and good for creators," the spokesperson said.

Following the filing, Paramount’s shares fell more than 3 percent. The company had agreed to pay Warner Bros. shareholders a quarterly "ticking fee" of $0.25 per share if the deal did not close by September 30, a penalty that could exceed $600 million each quarter.

The merger would combine two historic film studios, two streaming services and two news organizations under the leadership of David Ellison. While the Justice Department has cleared the deal and approvals have been obtained in several foreign jurisdictions, the multi-state lawsuit also includes attorneys general from Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York and Oregon. New York Attorney General Letitia James described the merger as a "bad deal" for workers and consumers and called the halt a "critical victory".

"Halting this merger while our case proceeds is a critical victory in our efforts to uphold the law and protect the film and television industries," James said.