Paramount Global (PSKY.US) Agrees to Suspend Warner Bros. Discovery (WBD.US) Acquisition Deal Pending Antitrust Lawsuit Decision

According to Zhitong Finance APP, Paramount SkyDance (PSKY.US) agreed on Friday to pause the acquisition of Warner Bros. Discovery (WBD.US) until court rulings are made on the lawsuits filed by several states challenging the transaction. This adds further uncertainty to the $110 billion deal.

According to the agreement, the deal will be on hold until as late as next June, shortening the legal proceedings by a few weeks compared to the original plan. However, this arrangement also comes at a significant cost. If the deal is delayed until next June, Paramount may need to pay Warner Bros. shareholders up to $1.7 billion in extension fees. Paramount had previously committed that if the deal was not completed by October 1, it would pay Warner Bros. shareholders about $7 million per day thereafter. This condition allowed Paramount to outbid Netflix and secure control of the storied studio during an intense bidding war.

California and 11 other states filed lawsuits on July 13, arguing that the deal would create a media giant capable of raising movie and TV program prices. New York Attorney General Letitia James stated, "Pausing the merger during the trial period is a key victory in our efforts to uphold the law and protect the film and television industries." She is leading the legal effort seeking to block the deal.

The lawsuit was filed in U.S. Federal Court in Oakland, California, and could undermine Paramount CEO David Ellison's plans to build the company into a major competitor to Netflix and Disney. Recent statistics on similar merger litigation cases show that courts usually take about eight months on average to reach a verdict in such cases.