Paramount agrees to pause Warner Bros deal while case plays out

A lawsuit by 12 states argues the merger would give the combined company excessive market power

Paramount Skydance on Friday agreed to pause its acquisition of Warner Bros Discovery until after a ruling on a challenge by states to the deal, plunging the $110 billion deal into further uncertainty.

The agreement pausing the deal until next June, at the latest, trims a few weeks off the case schedule. But it alsocomes with a price.

Paramount could owe as much as $1.7 billion in ticking fees to Warner Bros. shareholders if the deal is delayed until then. The fee costs $7 million a day if the merger does not close by Sept 30.

"We look forward to proving our case at trial," Paramount's spokesperson said.

California and 11 states sued on Jul 13, arguing the deal would create a media behemoth with the power to raise prices in film and television.

"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," said New York Attorney General Letitia James, who is suing to block the deal.

Similar merger challenges have taken an average of eight months for a judge to rule, a Reuters review of recent cases found.

The lawsuit, filed in Oakland federal court, threatens to derail Paramount CEO David Ellison's bid to transform his company into a major rival of Netflix and Disney.

Shares in Paramount fell 3.3 percent Friday and are down 37 percent this year.