The $81 billion Paramount-WBD merger has cleared regulators in 66 jurisdictions, yet a US state antitrust challenge could push closing into 2027 and cost Paramount more than $1 billion in ticking fees.
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Paramount-WBD Deal Faces $1 Billion Delay as States Sue
The $81 billion Paramount-WBD merger has cleared regulators in 66 jurisdictions, yet a US state antitrust challenge could push closing into 2027 and cost Paramount more than $1 billion in ticking fees.
The $81 billion Paramount Skydance-Warner Bros. Discovery merger cleared British regulators Thursday, leaving a US state antitrust lawsuit as the last major obstacle to a deal that could be delayed into 2027.
"As we've executed against our strategy over the past year, we've also prepared to close the transaction, and we remain confident it will be completed," David Ellison, chief executive at Paramount, said in a shareholder letter.
The UK's Competition and Markets Authority cleared the acquisition Thursday, ruling the tie-up does not pose a "substantial lessening of competition" in the country. The Department for Digital, Culture, Media and Sport also declined to intervene after Paramount offered legally-binding commitments to keep Channel 5's editorial direction separate from CBS and CNN. The clearances follow the European Union's conditional approval last month and bring to 66 the jurisdictions that have cleared or declined to challenge the deal.
The remaining hurdle is a lawsuit from 12 US states led by California, which alleges the combination would "extinguish competition" in Hollywood. A 12-day trial is set for March 2027, and under the merger agreement Paramount must pay WBD shareholders roughly $7 million for every day after September 30 the deal remains open — meaning a March verdict would leave Paramount owing well over $1 billion in ticking fees before a judge ever rules.
The deal would put HBO Max, "Harry Potter" and CNN under the same roof as CBS, "Top Gun" and the Paramount+ streaming service, creating a media company that Ellison argues can compete with the tech giants that dominate the industry. Paramount said the UK and EU decisions "further demonstrate the misguided and gerrymandered market definitions relied upon by the US state attorneys general in their antitrust complaint in California."
The Writers Guild of America has also filed suit, claiming the merged entity would have "both the incentive and the ability to lower costs by suppressing writers' wages and reducing output." Critics, including actors Alan Cumming, Benedict Cumberbatch and Benedict Wong, have urged regulators to challenge the deal, warning it "threatens to inflict immense harm on the British public."
The delay carries a steep price. With the March trial date, Paramount would owe WBD shareholders well over $1 billion in so-called "ticking fees" — roughly $7 million for every day after September 30 the deal has not closed. The last time a major Hollywood combination faced a comparable state-led challenge, the litigation dragged on for more than a year before regulators imposed conditions that reshaped the transaction.
The merger comes nearly one year after Skydance completed its acquisition of Paramount, putting the storied studio under Ellison's leadership. Paramount has since increased its film slate from eight to 15 films and unified the technology behind Paramount+ and Pluto TV, while reporting second-quarter revenue of $6.91 billion, slightly above the $6.88 billion expected by analysts. The company raised its full-year 2026 guidance for adjusted EBITDA to a range of $3.8 billion to $3.9 billion, citing savings from last year's consolidation.
On the Warner Bros. earnings call Thursday morning, CEO David Zaslav said the merger process has "been challenging" but the company expects the deal to close. "We are confident this transaction will close, and we've been trying to drive the value of the company to deliver to Paramount-Skydance and to David, the best company possible," Zaslav said.
If the states prevail, the deal collapses and Paramount faces a strategic void — having already bet its future on consolidation. If Paramount wins, it gains a combined library spanning CBS, HBO, CNN and Paramount+ that would rank among the largest in Hollywood. The trial begins in March 2027, with closing now expected as late as June 2027.
This article is for informational purposes only and does not constitute investment advice.
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