Warner Bros-Paramount merger suspended after legal setback

New blow for the $111 billion merger project: contested by several American states for competition reasons, the operation is officially suspended until an antitrust trial is held.

The mega-buyout of Warner Bros. Discovery by Paramount Skydance will it really be able to conclude?

The two groups agreed to postpone the finalization of their merger following an agreement reached with a coalition of twelve American attorneys general, who are challenging the operation in court.

Filed Friday in federal court, this agreement provides that the merger cannot be finalized before five days after the end of the antitrust trial, or June 1, 2027 at the latest if no judgment has been reached by then. No hearing date has yet been set, but this schedule effectively pushes back the operation by several months.

Led by California, the coalition of twelve states obtained an order at the beginning of the week temporarily blocking the merger for 28 days. According to the authorities, this merger, estimated at 111 billion dollars, risks reducing competition in the cinema and cable television sectors.

New York State Attorney General Letitia James welcomed this first victory : “Suspending this merger while our proceedings proceed is a vital victory in our efforts to uphold the law and protect the film and television industries. I look forward to continuing our action to prevent this illegal merger.“

Same satisfaction on the side of the Attorney General of California, Rob Bonta, who speaks of a “huge victory“, before explaining: “Our argument is simple: When too few companies concentrate too much power in markets essential to Americans’ lives, it makes things more expensive and degrades quality. This deal is great news for audiences, movie theaters and everyone who creates the films, series and news we consume.”

This postponement also constitutes a financial problem for Paramount Skydance. The group hoped to complete the merger before September 30, from which date it will have to pay Warner Bros. shareholders. Discovery compensation of 7 million dollars per day until the operation is finalized. Unless there is an agreement with the complaining States, this objective now seems out of reach.