Paramount Warner Bros merger delay has WBD execs eyeing lawsuit

The Paramount Warner Bros merger is facing a new kind of drama inside the studio gates: some senior Warner Bros. Discovery figures are privately hoping a state antitrust lawsuit kills the deal, Variety reported, citing multiple sources.

The proposed $111 billion takeover by Paramount Skydance has already been put on hold while the court fight plays out. Warner Bros. Discovery declined to comment to Variety.

What is the Paramount Warner Bros merger lawsuit?

Twelve Democratic state attorneys general, led by California, have sued to block Paramount Skydance’s planned acquisition of Warner Bros. Discovery. According to Variety, the states argue the transaction would violate the Clayton Act, the federal antitrust law aimed at stopping anticompetitive deals.

Paramount has agreed to pause the merger until the case is decided. The immediate fight is over timing: Paramount wants a trial this fall, while the states want proceedings to begin in 2027, Variety reported.

If the case goes to trial and the states win, Paramount is expected to appeal, according to Variety. That could leave the merger stuck in court into the second half of 2027.

Inside Warner Bros. Discovery, the mood is split. Variety reported that some executives hope the lawsuit slows the deal long enough to make it collapse, while others believe the merger is likely to close eventually.

One Warner Bros. Discovery executive told Variety that employees need more information and are wondering how to plan for next year, including the upfront advertising season. The executive said the company has to keep planning because the process could drag on for about a year.

The delay has added strain at both companies, especially with the possibility of layoffs if the merger closes, Variety reported.

Paramount Skydance chief David Ellison addressed the pause in a memo to employees Monday, according to Variety. “I know this additional uncertainty has been challenging, and I want to thank you for your continued patience, commitment and collective contributions,” he wrote.

Ellison also said Paramount remains confident in its legal position. “We believe this is the right path because the facts and the law are on our side, and a full hearing will demonstrate why the plaintiffs’ arguments should not prevail,” he wrote.

Warner Bros. Discovery still has room to run much of its business while the deal is pending, Variety reported. The company has expanded HBO Max internationally, can make bundling deals, can buy content and can renew or extend certain partner agreements, including with leagues such as the NHL or MLB.

Variety reported that some content licensing sales are allowed as long as they do not run beyond December 2028. A longer delay could push the companies closer to that limit.

A source in Warner Bros. Discovery’s cable networks division told Variety that business is continuing as usual. Greenlit shows are still moving ahead, the fall 2026 schedule is set and new programs are already being picked up for 2027.

There is still concern that a combined company could later reverse some decisions, the source told Variety, while adding that similar uncertainty existed when WarnerMedia and Discovery combined.

Paramount does not want the delay to hurt Warner Bros. Discovery’s business, according to Variety. One Warner Bros. executive put it plainly: “They need us to keep making money.”

The nerves even surfaced as comedy at a July 21 Academy Museum premiere for HBO Max’s “Stuart Fails to Save the Universe,” a sci-fi spinoff of “The Big Bang Theory.” Variety reported that co-creator Chuck Lorre joked to the room that the Ellison-Paramount deal had fallen through, then said Chipotle was buying Warner Bros.

The joke got laughs, Variety reported, but the afterparty talk returned to a more serious question: whether the deal can still be stopped. For now, the answer is in court.

This story draws on original reporting from Variety.