Paramount Agrees To Not Close Warner Bros. Discovery Transaction Until Next Year Or Until Lawsuit Merits Are Resolved

Paramount has agreed not to close its proposed merger with Warner Bros. Discovery until June 1, 2027, or until shortly after the merits of lawsuits brought by state attorneys general and the Writers Guild of America are resolved. The agreement is an extraordinary new development in the merger transaction, which has won regulatory approval from the federal government and European regulators. But U.S. District Judge Araceli Martinez-Olguin this week granted the states a temporary restraining order pausing the transaction for 14 days to hold a hearing on whether to grant a lengthier preliminary injunction. She later extended the TRO by another 14 days, through Aug. 17. After the court filing, shares in Paramount fell, and were off by 3.7% just before the market close. Watch on Deadline Read Paramount’s agreement not to close the transaction as legal proceedings take place. Hanging over the legal proceedings has been the prospect that Paramount would be on the hook to pay a $7 million-per-day “ticking fee” to Warner Bros. Discovery for every day that the transaction does not close past Sept. 30. In their filing in federal court on Friday, the attorneys for the parties wrote, “The transaction at issue in State of California and Writers Guild shall not close, be consummated, or otherwise be completed and Defendants will not take any steps, directly or indirectly, to integrate or consolidate their operations pursuant to the Transaction until the earlier of (1) five days after the merits determination in these matters, or (2) June 1, 2027. This stipulation and order extends to Defendants’ agents, officers, servants, employees, attorneys, and other persons who are in active concert or participation with Defendants.” A Paramount spokesperson said, “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. 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. Plaintiffs’ market definitions bear no relationship to the realities of today’s marketplace and cannot withstand scrutiny. We look forward to proving our case at trial.” The judge still has to sign off on the plan, but she had asked attorneys for the plaintiffs and defendants to meet to try to agree to a schedule. New York Attorney General Letitia James, representing one of a dozen seeking to block the transaction, said in a statement, “From the workers and artists who bring stories to life to the families who buy tickets at the box office, Paramount’s illegal takeover of Warner Bros. is a bad deal for all those who count on a competitive entertainment industry. Halting this merger while our case proceeds is a critical victory in our efforts to uphold the law and protect the film and television industries. I look forward to continuing our case to stop this illegal merger.” More to come.