According to court filings, a California court has scheduled the antitrust trial regarding the acquisition of Warner Bros. Discovery by Paramount Skydance for March of next year. The legal proceedings involve twelve US states and a screenwriters' union.
According to a source, the lawsuit, led by California attorneys general, has stalled the acquisition. Paramount had been pushing for a trial in November, according to a Wall Street Journal report.
The twelve US states argue that merging two major film studios, streaming services, and television channels like CBS and CNN would grant the corporation excessive market power in certain sectors.
Financial implications of the delay
The acquisition of Warner Bros. Discovery is valued at approximately $111 billion.
Termination fee Warner Bros. Discovery can collect if the deal is not completed by June 4, 2027.
Paramount CEO David Ellison stated that the multi-billion dollar deal is necessary to compete with streaming services such as Amazon and Netflix. He also characterized the lawsuit as having a political rather than a competition law background.
According to the merger agreement, if the transaction is not completed by September 30, Paramount will owe Warner Bros. Discovery a $650 million 'ticking fee' per quarter. Paramount is likely to pay at least $1.3 billion more due to the delay.
According to the merger agreement, the companies have set a deadline of June 4, 2027, to complete the takeover. If this deadline passes, Warner Bros. Discovery CEO David Zaslav can contractually cancel the deal and collect a $7 billion termination fee from Paramount.
Political and editorial concerns
Judge Araceli Martínez-Olguín signaled that she sees arguments for a preliminary injunction against the completion of the deal. According to analysts, the takeover is expected to proceed only after a decision on the lawsuits or by June 1, 2027, at the latest.
Critics of US President Donald Trump have raised concerns that CNN, which belongs to Warner Bros. Discovery, could lose editorial independence under Paramount. These critics also pointed out that the Paramount channel CBS adopted a friendlier tone towards the US government following its takeover by the Ellisons.
Paramount is backed by the family of software billionaire Larry Ellison, a known supporter of Donald Trump. President Trump has repeatedly stated that it is particularly important to him that the broadcaster also changes owners during a Warner deal.
Paramount made a higher bid for the entire Warner Bros. Discovery corporation, which includes television channels like CNN. This follows a previous decision by Warner last year to sell its streaming and studio business to Netflix.
Separately, Charter reported during its earnings call last month that it lost 1% of cable subscribers over the past year, while according to analysts, YouTube TV is on track to become the largest pay-TV player.
