Paramount Skydance is working to close its $110 billion acquisition of Warner Bros. Discovery before a Sept. 30 deadline written into the original merger agreement, a provision that raises the price Paramount must pay for every additional day the deal remains unfinished.
The all-cash transaction, which values Warner Bros. Discovery at $31 a share, would combine two of Hollywood's oldest studios along with cable networks such as CNN, TNT and the Discovery Channel and the HBO Max streaming service. Warner Bros. Discovery shareholders approved the deal in an April vote, but the merger has spent the months since clearing a sequence of regulatory and legal hurdles across four continents.
A Costly Legal Battle
The U.S. Department of Justice cleared the deal in June, followed by regulators in Australia the same month, the European Commission in July — which required Paramount to divest its stake in United International Pictures — and the United Kingdom in August, which imposed editorial-independence conditions on the companies' news and children's programming divisions. The Federal Communications Commission separately approved a structure allowing sovereign wealth funds from Saudi Arabia, Qatar and the United Arab Emirates to hold up to 49.5% of the combined company's equity on a non-voting basis.
The final obstacle came from California and eleven other states, which sued in July to block the merger on antitrust grounds; a federal judge issued a temporary restraining order on July 20 that froze the transaction. That suit was resolved on Sept. 21, when Paramount reached a settlement with the state attorneys general and the Writers Guild of America. Under the five-year consent decree, the merged company must release 30 films annually in its first two years and 32 in each of the following three, invest $1.5 billion in additional domestic production, and pay $30 million for every film it falls short of that commitment. Paramount also agreed to stand up an independent editorial oversight board for CBS News and CNN and to refrain from selling or closing either studio's Los Angeles lot for five years.
The Writers Guild, which had joined the states in challenging the deal, said the production and theatrical-release commitments gave it enforceable guarantees it had lacked before, while the coalition of state attorneys general framed the five-year monitoring committee as a check against the combined company shedding jobs or programming faster than promised.
What Comes Next
Paramount Skydance chief executive David Ellison said the settlement removed the last barrier to closing. "With both groups' concerns now addressed, we have complete clearance for this merger and can move toward closing," Ellison told staff in a memo distributed after the settlement, adding that he expected the deal to close within roughly two weeks — a window that lands on or just before the Sept. 30 cutoff.
The newly merged company will be headquartered in Los Angeles.
David Ellison, chief executive, Paramount Skydance
The Sept. 30 date matters because the original merger agreement includes a fee that raises the effective purchase price the longer closing slips past that point, giving both sides a financial incentive to finish paperwork this week rather than let the acquisition drag into October. Shareholders had first backed the deal in the same April vote that rejected exit-pay packages for outgoing Warner Bros. Discovery executives, including chief executive David Zaslav, a sign of investor unease even as they endorsed the underlying transaction.
Once completed, the deal will create one of the largest media and entertainment companies in the world, combining Paramount's CBS network, Nickelodeon and Paramount Pictures with Warner Bros.' film studio, HBO Max and Discovery's cable portfolio. Analysts have flagged likely cost cuts and cable-network divestitures as the combined company works to pay down acquisition debt, and integrating two large unionized workforces is expected to dominate the next several months.
For now, markets are watching for confirmation that financing — backed by the Ellison family, RedBird Capital Partners and the Gulf sovereign funds — has been finalized, and for the procedural filings with the Securities and Exchange Commission that would formally mark the transaction's close before the week is out.
