Merger deal includes roughly $650 million quarterly ticking fee

Paramount said Friday it will not proceed with its $81 billion merger with Warner Bros. Discovery until legal challenges to the deal are resolved or June 1, 2027, whichever comes first. The decision halts a combination that would bring together two major movie and television studios, the CBS broadcast network, dozens of cable channels including CNN, and streaming services Paramount+ and HBO Max under a single parent company.

The announcement came after a California federal court granted a temporary restraining order stopping the deal from closing. A hearing on a preliminary injunction that would bar Paramount from closing the merger while the states’ antitrust lawsuit proceeds is scheduled for next week.

Twelve states and the Writers Guild of America are challenging the merger on antitrust grounds, arguing the deal is anticompetitive. In her ruling granting the temporary restraining order Monday, U.S. District Judge Araceli Martínez-Olguín said the combination of the two film studios’ market share of theatrical movies “has persuaded the court that it can presume the proposed merger is likely to violate antitrust laws.”

“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,” Paramount said in a statement Friday.

Paramount has argued that the deal will help the company better compete with streaming giants such as Netflix and that concerns raised by the states do not reflect the realities of today’s competitive landscape. “This transaction is good for competition, good for consumers, and good for creators,” Paramount said, adding that the “plaintiffs’ market definitions bear no relationship to the realities of today’s marketplace and cannot withstand scrutiny.”

The states counter that the merger would result in higher prices, lower quality, and less content for film and television.

Paramount’s merger agreement with Warner includes a “ticking fee” with payments to Warner shareholders of roughly $650 million a quarter beginning in October until the transaction closes. Paramount’s deadline to complete its merger with Warner is March 4, 2027, and automatically extends to June 4, 2027, if the only remaining obstacles are regulatory approvals or governmental orders, including an antitrust injunction.