Warner acquisition frozen: Paramount may face over a billion dollars in compensation payments
Following a federal court ruling that the deal must be re-examined, Paramount has been forced to halt the acquisition of Warner Bros. Discovery. The company is expected to pay a penalty of $7 million per day starting September 30 until a judge rules on the future of the merger. Based on past cases, such proceedings can take many months.
Paramount has agreed to freeze its $110 billion acquisition of Warner Bros. Discovery until a federal judge rules on a lawsuit filed by 12 US states against the deal, according to legal documents filed on Friday, as reported by Reuters.
Under the agreement, the parties will halt the advancement of the deal until five days after the judge rules on the merits of the case, or until June 1, 2027, whichever comes first. The delay could cost Paramount about $7 million per day in compensation fees it committed to pay to Warner Bros. Discovery shareholders if the deal is not closed by September 30.
California and 11 other states filed a lawsuit against the deal on July 13, claiming that the merger could create a media giant with market power that allows for price increases in the film and television sectors.
In June 2025, Warner Bros. Discovery announced its intention to split into two separate companies: one focusing on film studios and streaming services, and the second consolidating its linear television assets. This intention led to a bidding war for the company's assets. In October 2025, the Warner board of directors rejected an initial offer from Paramount worth nearly $60 billion, and in November of that year, competing offers were submitted by Netflix, Comcast, and Starz.
In December 2025, Warner Bros. signed a merger agreement with Netflix worth about $82.7 billion, which included only Warner's streaming and film studios, while separating the linear television assets into a separate company. Netflix withdrew the offer in February 2026 after the Warner board determined that Paramount's updated offer — $31 per share, with a total value of about $110.9 billion, including linear television assets such as the CNN network — was superior to the existing agreement with Netflix. Warner and Paramount officially signed the updated merger agreement shortly thereafter.
Warner shareholders approved the deal in April 2026, and the US Department of Justice approved it about a month later. However, in early July, the attorneys general of 12 states filed a lawsuit to block the merger, claiming it could harm competition in the fields of film distribution, cable television, and streaming. Following the lawsuit, a federal judge issued a temporary restraining order that halted the completion of the deal for 14 days — an order that has now effectively been extended by the consent of the parties until a final ruling in the case, or until June 2027.
A review conducted by Reuters of similar petitions against mergers found that, on average, it takes judges about eight months to reach a ruling in cases of this type.
