Paramount Cleared 68 Regulators and Still Can't Close on Warner Bros. Discovery
On 14 August, Paramount Skydance announced that its acquisition of Warner Bros. Discovery had satisfied every regulatory clearance the deal requires. Eight months of review across 68 jurisdictions, including the United States, the European Union and China, produced no order blocking the transaction. Under the old rules of thumb, that sentence would be the end of the story.
It isn’t close to the end of the story. Paramount has already agreed in court not to close the deal until 1 June 2027, or until the merits of the cases against it are resolved, whichever comes first.
The agreement, signed on 27 February, has Paramount paying $31.00 a share in cash for all outstanding WBD stock, with an equity investment of up to roughly $47 billion behind it and a guarantee from the Ellison trust. Both boards approved it unanimously, shareholders approved it in the spring, and the Justice Department cleared it. What stands in the way is a coalition of twelve state attorneys general led by California’s Rob Bonta, plus a separate action from the Writers Guild of America arguing the combination would unlawfully narrow the market for writers’ services. The states’ theory concerns the combined company’s position in theatrical distribution and basic cable. Trial is set for March 2027.
The federal clearance stopped being the finish line
This is the part worth dwelling on, because it generalizes well beyond one deal.
For most of the modern merger era, the federal antitrust agencies were the gate. Clear the DOJ or the FTC, satisfy the sector regulator, and a well-financed buyer could close. State attorneys general had parallel authority under the Clayton Act and occasionally used it, but rarely as the decisive constraint on a megadeal that Washington had already waved through.
That’s changed, and Paramount is the demonstration case. A federal green light now buys you the right to litigate against a coalition of states and a union in front of a judge with the power to freeze you for a year and a half. The DOJ’s approval is an input, not a verdict.
Paramount’s lawyers have called the states’ challenge one of the weakest merger cases in modern antitrust history, and they may be right on the substance. It doesn’t matter much in the near term. Time is the remedy the plaintiffs actually obtained, and they obtained it without winning anything on the merits.
What the delay costs
Quite a lot, and the meter is visible.
The merger agreement carries a ticking fee: if the transaction hasn’t closed by 30 September, WBD shareholders collect an additional 25 cents a share for each quarter, measured daily, until it does. Held open to mid-2027, that accrues into real money against a purchase price that was already stretching Paramount’s balance sheet. The company is reported to be keen on settling before trial for exactly this reason.
The market has drawn its own conclusion. Paramount shares fell to $8.21 on the day the standstill was disclosed, brushing a 52-week low, and the stock has not recovered its footing since. Meanwhile David Zaslav has sold roughly $200 million of WBD stock since the deal was struck, under a trading plan adopted in March, which tells you something about how the seller’s side views the risk of the thing actually closing on the original terms.
For everyone else in media, the lesson is procedural rather than dramatic. If your deal thesis assumes that federal approval ends the regulatory question, price in another eighteen months and a state courtroom. Both of the year’s biggest broadcast and studio transactions are now sitting in that same position, cleared in Washington and immobilized in California.