Paramount Warner Bros Merger Faces March 2027 Trial

The Paramount Warner Bros merger faces a state-led antitrust trial set for March 2027, delaying closing and increasing deal costs, even as Paramount Skydance raised its 2026 adjusted EBITDA outlook after mixed second-quarter results.

Trial Delay Increases Deal Costs

Paramount Skydance Corporation (PSKY) agreed in February 2026 to acquire Warner Bros. Discovery (WBD) in an all-cash merger valued at about $110–111 billion, or $31 per WBD share, according to the merger agreement. Both companies’ boards unanimously approved the deal, which remains subject to regulatory clearances, a WBD shareholder vote, and customary closing conditions. The original timetable targeted a third-quarter 2026 closing.

The agreement includes a $0.25 per share quarterly ticking fee that begins after September 30, 2026. Based on WBD’s share count, this amounts to roughly $650 million per quarter, or about $7 million per day starting October 1. If the deal fails to close, Paramount would owe approximately $7 billion, increasing near-term cash exposure as court delays extend the timeline and pressure financing.

A coalition of 12 state attorneys general, led by California, along with the Writers Guild of America, filed antitrust lawsuits in the U.S. District Court for the Northern District of California (Case No. 4:26-cv-07116) to block the merger. On July 20, Judge Araceli Martínez-Olguín issued a temporary restraining order halting closing for two weeks. The order was extended through August 17. On July 24, the parties agreed to a standstill under which Paramount cannot close until five days after a final judgment or June 1, 2027, whichever comes first. This agreement canceled a preliminary injunction hearing and moved directly to a full trial on the merits.

Paramount sought to begin the trial on November 4, 2026, while the states and the Writers Guild preferred spring or early summer 2027. A federal ruling on August 4 set the trial for March 2, 2027, with an estimated 12 court days. The trial will address state antitrust claims over the merger’s competitive effects, separate from the federal review.

The Department of Justice Antitrust Division completed its review and approved the acquisition on June 12, 2026, finding no likely harm to competition. The European Commission registered the transaction on February 24, 2026, and approved it subject to commitments, including Paramount’s agreement to end a film-distribution joint venture with Universal Pictures. The U.K. Competition and Markets Authority opened a formal investigation in June and set an early August deadline for a Phase 1 decision. The deal has cleared or faced no challenge in about 65 other jurisdictions, including China, Brazil, Australia, and South Korea.

Q2 Results and Outlook

Paramount Skydance reported mixed second-quarter 2026 results on August 4, showing strong direct-to-consumer streaming growth and margin expansion at Paramount+ offset by weakness in linear TV advertising, affiliate revenues, and challenging theatrical comparables. The company raised its full-year adjusted EBITDA outlook, citing streaming gains, improved direct-to-consumer margins, and cost discipline.

Analysts noted mid-teens streaming revenue growth and margin expansion at Paramount+, while theatrical and sports softness weighed on the TV Media segment. These results reflect nearly a year since Skydance’s acquisition of Paramount and the combined company’s shift toward streaming as a central profit driver.

CEO David Ellison reiterated confidence that the Warner Bros. Discovery transaction will close despite litigation. In an internal memo, he stated the company remains highly confident the deal poses no legal obstacles and will be completed. The stronger streaming momentum and raised EBITDA outlook provide Paramount some cushion to absorb near-term legal and deal-related costs, even as the court timetable dominates the calendar.