Key facts
- Paramount has agreed to delay its $111 billion acquisition of Warner Bros. Discovery.
- The delay is in response to an antitrust challenge from 12 state attorneys general.
- The deal will not close until June 2027 or five days after the antitrust trial concludes.
- Paramount will pay a 'ticking fee' of approximately $7 million per day to Warner Bros. Discovery shareholders if the deal is delayed beyond September 30.
- The company's deep financial resources allow it to absorb potential ticking fees, estimated to reach up to $1.95 billion.
Paramount has agreed to delay its $111 billion acquisition of Warner Bros. Discovery (WBD) until June 2027, or five days after an antitrust trial concludes, amid concerns raised by attorneys general from 12 states. This decision comes after a judge had already paused the deal, which had previously received approval from the U.S. Department of Justice and the European Commission.
The agreement to delay, rather than fight an immediate closure, suggests Paramount, led by CEO David Ellison, is confident in its legal position and believes the cost of waiting is manageable. Paramount will incur a 'ticking fee' of approximately $7 million per day if the deal doesn't close after September 30, potentially reaching up to $1.95 billion by June 1. However, the substantial resources of the Ellison family and their financial partners are expected to absorb this cost, which represents a small percentage increase to the overall purchase price.
Despite the financial implications, the delay represents a significant setback for Ellison's ambition to create a Hollywood superpower by merging HBO Max with Paramount+. The opportunity cost of not integrating the streaming services and studios sooner is a primary concern. In the interim, Paramount is focusing on enhancing its own streaming service with new features and content.