Paramount Skydance and Warner Bros. Discovery delay merger until 2027

Paramount Skydance and Warner Bros. Discovery delay merger until 2027

Paramount Skydance and Warner Bros. Discovery have agreed to push back the closing of their $110 billion merger until June 1, 2027. The extension remains in place unless a court reaches a final decision regarding an antitrust lawsuit challenging the transaction before that date.

The delay follows legal action initiated by California Attorney General Rob Bonta and 11 other state attorneys general. These officials sued to block the merger, claiming that the consolidation of two major Hollywood entities would reduce competition, increase costs for consumers, and negatively impact the streaming, cable, and film industries.

Paramount Skydance stated it maintains confidence in the merger and believes the court process will demonstrate the benefits of the deal. Despite this confidence, the company noted that the legal battle introduces additional uncertainty and may lead to increased costs.

Financial analysts suggest the delay carries a specific price tag. According to Morningstar analyst Matthew Dolgin, Paramount could face additional payments estimated at roughly $2 billion if the merger does not close until the extended 2027 deadline. This expense is attributed to a daily ticking fee that begins accumulating in October.

Dolgin characterized the financial impact on Paramount as manageable and the added expense as relatively small compared to the overall $110 billion value of the transaction. He also noted that Warner Bros. Discovery could potentially offset the effects of the waiting period through the merger-related payment structure.

The legal obstacle persists despite the fact that regulators have already approved the deal in most required jurisdictions. Dolgin believes the decision to delay may be a strategic move by Paramount to ramp up the legal process and improve its standing with the presiding judge. If the parties fail to reach a settlement, the analyst expects a trial could take place during the first half of 2027.

Market reactions to the news were mixed. Paramount Skydance (PSKY) stock rose 0.1% in premarket trading on Monday. This slight increase followed three consecutive weeks of losses. The stock is currently on track for its worst monthly performance since March, having cratered 38% so far this year. Meanwhile, Warner Bros. Discovery (WBD) stock has dropped 10% during the same period.

Retail investor sentiment on Stocktwits remained bullish, with message volume increasing by 190% over the last week. Some users expressed skepticism that the process will actually take until 2027, arguing that most relevant authorities have already green-lit the deal.

Dolgin remains confident the combination will eventually close, maintaining price targets of $20 for Paramount and $28 for Warner Bros. Discovery.

The companies now await further developments in the antitrust lawsuit, with the next critical window for a potential trial falling in the first half of 2027.