Paramount-WBD Merger Delay Triggers Stock Drops and Legal Pushback
A court-ordered postponement of the antitrust case against the Paramount-Warner Bros. Discovery merger led to lower share prices and renewed opposition from state attorneys general and industry groups.
Shares of Paramount Global and Warner Bros. Discovery fell after a judge delayed the antitrust lawsuit challenging their $110 billion merger. The postponement gives the companies more time before a trial, which the California attorney general said could not occur before June 1, 2027, or until a legal ruling on the case is issued.
California Attorney General Rob Bonta praised the agreement, calling it "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." He added that the state will continue to pursue its case in court.
Activists representing the 12 state attorneys general and the Writers Guild of America emphasized the need for continued organization. "The power of many can beat the power of money when we organize – and this is not a done deal," said Anjuli Kronheim Katz, executive director of the Committee for the First Amendment. Writers Guild West secretary-treasurer Peter Murrieta warned that the merger could lower writers' compensation and reduce film and series output.
Paramount stock touched a 52-week low before closing at $8.21, while WBD shares slipped about 1% during the session and fell further after hours. Analysts noted that the delay could increase costs, citing a $7.2 million-per-day "ticking fee" Paramount agreed to pay WBD shareholders if the deal does not close by September 30, and a $7 billion breakup fee if the merger is abandoned.
Legal experts said Paramount likely saw the risk after a judge issued a temporary restraining order and later extended it, noting that the order limited the company's ability to argue streaming efficiency and excluded the ticking fee as a justification for speeding the deal. The attorneys general are seeking a trial date in the winter, with Paramount expected to propose a November date.
If the case proceeds to trial and Paramount loses, the company may appeal to the Ninth Circuit and potentially the Supreme Court. Meanwhile, both firms face operational uncertainty as they prepare quarterly earnings reports and reassess projections for the merger's completion.
"The deal may still close or it may not," said Mike Proulx, vice president at Forrester Research. "What we know is that the path to either outcome just got longer, messier, and likely more expensive."