Paramount-Warner deal at risk of delays costing billions

The Paramount logo is displayed on a water tower at the Paramount Studios lot on July 13, 2026 in Los Angeles, California. Photo by Justin Sullivan/Getty Images files

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Paramount Skydance Corp. was on the brink of closing its blockbuster US$110 billion takeover of Warner Bros. Discovery Inc. Now the companies are facing a legal hurdle that risks putting the deal on hold for months at a cost that could quickly climb to billions of dollars.

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On Monday, a federal judge granted a request from states challenging the deal to pause the tie-up for two weeks, saying it “likely” violates antitrust law. But that could be just the start of a much longer delay. In early August, U.S. District Judge Araceli Martínez-Olguín will hold a hearing in Oakland, California, to determine whether the acquisition should be put on ice pending the outcome of a full trial.

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California and 11 other states opposing the transaction want a trial in April next year. Paramount hasn’t offered an alternative and no date has been set. The companies had previously hoped to close as soon as Wednesday, when European regulators are expected to clear the deal.

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Now, Paramount is facing a race against the clock. If it doesn’t close the deal by the end of September, Paramount must pay late fees to Warner Bros.’ shareholders of about US$7 million per day. That makes an April trial date an eternity for the company that was so close to tying the knot. With the daily fee, an April trial could total well over US$1 billion in extra costs to Paramount.

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Paramount and Warner Bros. shares were largely unchanged as trading began on Tuesday morning. Paramount had fallen two per cent on Monday, while Warner Bros. was down 3.8 per cent that day.

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In ordering the brief pause, Martínez-Olguín said the states’ case is in the public interest, is likely to ultimately succeed and would be harmed if the deal closed sooner. The judge must make the same determination in two weeks, meaning the odds are high the states will secure a longer delay.

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Paramount is expected to appeal if it loses that ruling, but a decision wouldn’t likely come until the end of the year or later.

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The pause is “certainly not good from Paramount or Warner Bros.’ perspective,” said Craig Huber, a media analyst at Huber Research Partners. “Any delay in this is certainly not good for Paramount,” he said. It is “money they can’t afford.”

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The Writers Guild of America is also challenging the transaction, arguing that it would harm competition in the markets for film and television writing.

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Paramount inked the deal in February after beating back Netflix Inc. following a heated bidding war. The takeover unites two iconic Hollywood studios behind legendary films from Casablanca and Harry Potter to Mission: Impossible. It also brings under Paramount’s control two major news networks — CNN and CBS — the streaming powerhouse HBO Max and dozens of cable networks.

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Paramount argues the deal is a net win for Hollywood and will provide much-needed competition against tech giants like Netflix, Apple Inc. and Alphabet Inc.’s YouTube. The company already won the blessing of the U.S. Justice Department.