Paramount Skydance has agreed to delay the closure of its roughly $110 billion merger with Warner Bros. Discovery until a federal judge rules on a multi-state lawsuit seeking to block the deal — or until June 1, 2027, whichever comes first. The agreement, filed in court on Friday, extends a freeze that U.S. District Judge Araceli Martínez-Olguín had already imposed earlier in the week through a temporary restraining order, after she found that the 12 states challenging the deal had raised "serious questions" about its potential to "substantially lessen competition."

The coalition of states, led by California, filed suit on July 13, arguing that combining two of Hollywood's largest media conglomerates would "extinguish competition" in the film and television industry and leave consumers — particularly moviegoers and cable subscribers — with fewer choices. New York Attorney General Letitia James, one of the states' lead voices in the case, called Friday's pause a "critical victory," adding that the merger posed a threat to workers, artists, and families who depend on a competitive entertainment industry. Paramount, which was itself acquired by Skydance only last year, dismissed the states' claims as meritless and framed the agreement as a strategic move, calling it the "fastest and clearest way" to prove the deal's merits at trial.

The financial stakes of the delay are considerable. Paramount had previously agreed to pay Warner Bros. shareholders approximately $7 million per day in so-called ticking fees if the merger was not closed by September 30. With the pause now potentially extending to June 2027, those fees could accumulate to more than $1.7 billion. A review of recent similar merger challenges by Reuters found that such cases take an average of eight months for a judge to reach a ruling on the merits.

Beyond the competitive concerns, the proposed merger has drawn scrutiny over its potential media implications. Warner Bros. Discovery currently owns CNN, and critics have raised concerns about the editorial independence of a combined entity that would also control CBS — a network that has faced allegations of pro-Trump bias under CEO David Ellison, whose father, tech billionaire Larry Ellison, is a known ally of President Donald Trump. The European Commission approved the deal subject to conditions, while U.S. federal regulators had previously cleared it without conditions.

The case now moves toward a full trial on the merits, with the judge in Oakland, California set to weigh whether the combined company's substantial market share would cause lasting harm to competition in Hollywood. The outcome could reshape the American media landscape at a time of significant consolidation across the entertainment industry.