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The blockbuster merger of Paramount and Warner Bros. Discovery is on hold — possibly for many months — as two legal challenges to the $111 billion deal play out in court.
In a legal filing in federal court in California on Friday, Paramount says it has agreed not to take any steps to acquire Warner until June 1, 2027, or five days after the lawsuits are resolved, if that comes first.
The proposed deal would unite Paramount and Warner's film studios, streamers Paramount+ and HBO, and dozens of cable channels, along with CBS and CNN.
But Paramount is battling a pair of lawsuits filed by a consortium of 12 states and from the Writers Guild of America, which represents many entertainment professionals who work in Hollywood.
The Democratic attorneys general and the Writers Guild allege that Paramount's purchase of Warner Bros. would reduce competition, hurting filmgoers along with TV and news consumers and especially those who create entertainment programming and the news content that the public relies on.
Earlier this week, U.S. District Judge Araceli Martínez-Olguín granted a temporary restraining order to pause the acquisition. Martínez-Olguín has yet to sign the agreement filed Friday.
In a statement, New York Attorney General Leticia James wrote, "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."
"Our argument against this illegal merger is straightforward: When too few corporations have too much power in markets central to American life, it makes things more expensive, and it makes things worse," said California Attorney General Rob Bonta.
The delay will have huge financial costs for Paramount. Starting Oct. 1, Paramount has to pay Warner shareholders a "ticking consideration" of roughly $650 million for every 90 days the deal is set back. If the deal is not closed by June 4, 2027, Paramount would have to pay Warner $7 billion according to the terms of the deal that Warner shareholders approved.
A Paramount spokesperson confirmed those fees are not affected by the latest development.
Paramount said in a statement that the company looks forward to going to trial.
"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," the statement said. "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."
The proposed deal has gotten scrutiny outside Hollywood for the relationship between Paramount's controlling family and President Trump — especially because two major newsrooms would be under that family's control.
The merger is largely bankrolled by Oracle co-founder Larry Ellison, the father of Paramount CEO David Ellison and a close ally of Trump. Trump has long accused CNN of being "fake news" and has publicly mused about what he'd like to do to the cable news giant.
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