Paramount and Warner Bros Discovery (WBD) have agreed to delay their proposed $110 billion merger until at June of next year while the entertainment giants defend the transaction against separate antitrust lawsuits brought by a coalition of state attorneys general and the Writers Guild of America (WGA).
The agreement was disclosed Friday in a joint court filing, and does not take effect until a judge has signed it. The judge overseeing the case previously extended a temporary restraining order that prevented Paramount from moving forward with the acquisition.
Under the proposed arrangement, Paramount and WBD will not close the transaction, integrate their businesses or take other steps to complete the merger until June 1 or five days after the court issues a decision on the merits of the cases, whichever occurs first.
The agreement replaces the shorter temporary restraining order imposed earlier this week and ends Paramount’s previous plan to complete the acquisition by the end of September.
The parties also agreed to cancel an August 3 preliminary injunction hearing. The Writers Guild has withdrawn its motion for a preliminary injunction, allowing both challenges to move directly toward trial. The parties are expected to submit a proposed trial schedule by July 31.
The deal announced last year brings a number of film and TV properties under a single owner, including Paramount Pictures, Warner Bros Studios, CNN, TBS, TNT Sports, Eurosport, Channel 5 in the United Kingdom, Network 10 in Australia, CBS, Cartoon Network, Nickelodeon, MTV, VH1, Paramount Plus, HBO Max and others.
California Attorney General Rob Bonta and 11 other states filed an antitrust lawsuit earlier this month seeking to block the acquisition. The states argue the merger will reduce competition in wide-release theatrical films, anticipated blockbuster releases and the licensing of basic cable channels.
“Today’s agreement is 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,” Bonta said in a statement e-mailed to The Desk on Friday. “We are eager to continue to make our case in court and celebrate another tremendous win in our effort to ensure this unlawful merger never sees the light of day.”
Paramount has rejected the antitrust claims and characterized the delay as a faster route to a final decision.
“Today’s agreement is a significant win because the result is exactly what we have sought from the outset: a direct path to a trial based on the evidence,” a Paramount spokesperson told reporters. “This is the fastest and clearest way to prove that this transaction is good for competition, good for consumers, and good for creators, a conclusion dozens of competition authorities around the world have already reached.”
Paramount’s stock price closed down more than 3 percent on news of the agreement, while WBD’s stock price was down less than 1 percent.
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The delay could carry a substantial financial cost for Paramount, which agreed to pay WBD shareholders a quarterly delay fee if the deal did not close by the end of September. Under the terms of the agreement, WBD shareholders are entitled to an additional 25 cents per share for every three-month period that the deal is delayed, which amounts to nearly $650 million.
The acquisition previously secured the approvals of the U.S. Department of Justice and regulators in the European Union, though it still requires a green-light from the Federal Communications Commission (FCC) because Paramount is accepting foreign investment to bankroll its acquisition — the FCC has rules that limit foreign ownership of licensed broadcast stations like those owned by Paramount’s CBS.
