Paramount Skydance has agreed to postpone the finalization of its purchase proposal for Warner Bros. Discovery, extending the potential deadline until June 2027. This delay comes amidst ongoing legal proceedings in the United States, which could result in an increase in the total cost of the transaction.
Last week, a group of US state attorneys general, led by California Attorney General Rob Bonta, filed a lawsuit alleging that the merger could harm competition. In response, the judge overseeing the case issued a temporary restraining order on Monday (20), causing an initial delay in the completion of the union.
Previously, Paramount had repeatedly stated its intention to close the deal by the end of September. Even with the postponement, the company classified this development as a 'significant victory' in a statement released this Friday (24).
In an official note, the company stated that it views the progress of the process favorably, as it allows the case to be evaluated directly based on evidence. Paramount asserted: 'The outcome is exactly what we have sought from the beginning: a direct path to an evidence-based trial. 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 that dozens of competition authorities around the world have already reached.'
Additionally, the company refuted the arguments presented by the plaintiffs, declaring: 'The plaintiffs' market definitions have no relation to the reality of the current market and do not withstand closer scrutiny. We look forward to proving our case at trial.' Following the release of this information, Paramount Skydance shares fell by 3% during afternoon trading on that Friday.
Under the terms established between the companies, Paramount must pay a progressive fee, known as a 'ticking fee,' to Warner Bros. Discovery shareholders if the deal closing extends beyond the September 30th deadline. This payment will add US$ 0.25 (R$ 1.27) per share for each subsequent quarter until the acquisition is completed. This financial mechanism could represent approximately US$ 650 million (R$ 3.3 billion) in quarterly amounts.
Paramount and Warner Bros. Discovery announced the merger agreement in February, after the company led by David Ellison surpassed an offer made by Netflix. The deal, valued at US$ 110 billion (R$ 560.7 billion), would unite two major Hollywood studios, two popular streaming services, and several television networks.
The operation already received the green light from the U.S. Department of Justice's antitrust division in June. More recently, European Union (EU) antitrust regulators also approved the transaction earlier this week. Despite these approvals, attorneys general from various American states argue that the merger could reduce competition in the sector and cause job losses in the film industry.
When filing the lawsuit last week, California Attorney General Rob Bonta warned that the deal could be detrimental to both consumers and industry businesses. He stated: 'The illegal merger of these two entertainment giants would lead to higher prices, lower quality, and less content for cinema and television, harming movie theaters, basic cable distributors, and ultimately, the public in every sofa and cinema seat in the US.'
A federal judge ruled on Thursday, the 23rd, that Paramount cannot finalize the purchase of Warner Bros. Discovery before August 18th while evaluating two lawsuits aimed at blocking the transaction.
This new ruling extends a previous suspension. On January 20th, Judge Araceli Martínez-Olguín of the U.S. District Court for the Northern District of California had already frozen the deal for two weeks after a group of states filed a lawsuit to prevent the acquisition, raising antitrust concerns.
At that time, she scheduled a hearing for August 3rd to decide whether to issue an injunction preventing the deal from closing throughout the legal proceedings. Paramount requested a postponement of this hearing by Judge Martínez-Olguín to a later date in August and asked permission to hear witnesses.
The Writers Guild of America, which initiated its own lawsuit against the deal this month, also requested that its motion for an injunction be considered simultaneously with the states' request. This union alleges that the merger would be detrimental to screenwriters.
The judge extended the suspension order by another 14 days, setting the deadline until August 17th. Furthermore, she indicated openness to postponing the hearing, possibly beyond that date, provided all parties reach a consensus on a new schedule and Paramount commits not to close the deal in the interim period.
The lawsuits jeopardize Paramount's plans to create a large media conglomerate, which would integrate two film studios, the HBO Max and Paramount+ streaming services, and the CBS and CNN television networks. The delay generates direct financial costs, as Paramount agreed to pay $650 million (equivalent to R$ 3.3 billion) to Warner Bros. Discovery shareholders every quarter the deal remains unresolved.
A spokesperson for the California Attorney General, Rob Bonta, who is leading the state's action, informed The New York Times that the office awaits the opportunity to present its arguments and 'block the illegal acquisition of Warner Bros. by Paramount.' Paramount did not provide an immediate response to the newspaper's request for comment.
