Judge Pauses Paramount’s $111B WBD Deal

A federal judge has paused Paramount’s $111 billion acquisition of Warner Bros. Discovery, putting one of the biggest media deals in recent years on hold just weeks after the U.S. Department of Justice approved it in June. The freeze came after a coalition of 12 state attorneys general sued on July 13, arguing the merger would reduce competition and hurt movie theaters, cable distributors, and viewers.

The proposed takeover caps months of bidding for Warner Bros. Discovery, which had been exploring strategic options since October as it struggled with billions in debt, falling cable viewership, and intense streaming competition. In December, Netflix said it would buy WBD’s studios and streaming business for $82.7 billion. But in late February, Paramount, run by David Ellison, swooped in with a larger $111 billion offer for all of WBD’s assets, including its studios, HBO, streaming services, games, and TV networks such as CNN and HGTV.

WBD’s board had initially favored Netflix’s narrower bid, even after Paramount pressed with an earlier offer of roughly $108 billion. Netflix later revised its proposal to an all-cash bid of $27.75 per share, while Paramount added a $0.25 per share quarterly ticking fee if the deal failed to close by December 31, 2026, plus a promise to cover WBD’s $2.8 billion breakup fee with Netflix. Paramount finally raised its bid to $31 per share, and Netflix walked away.

“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval. However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid.”

Debt load and political scrutiny

The financial and political baggage around the deal is substantial. Paramount would assume about $33 billion of WBD debt on top of its own obligations. The combined transaction is backed by a $54 billion debt commitment from Bank of America, Merrill Lynch, Citi, and Apollo Global Management, along with $45.7 billion in equity from Larry Ellison.

WBD had previously balked at Paramount’s structure, saying it could leave the combined company carrying $87 billion in debt. The board also raised concerns about investors supporting Paramount’s bid, including sovereign wealth funds from Saudi Arabia, Qatar, and Abu Dhabi.

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The deal has drawn added attention because of David Ellison’s control of Paramount and the influence of Larry Ellison, the Oracle chairman, the world’s sixth-richest person, and a major Trump donor. According to the source, critics and employees have raised concerns about expected job cuts, pressure on news operations, and the editorial direction of CBS News and CNN.

August 3 hearing could decide next step

Opposition had been building even before the latest lawsuit. California Attorney General Rob Bonta said on February 26 that the companies had not cleared regulatory review, while Elizabeth Warren, Bernie Sanders, and Richard Blumenthal had earlier urged antitrust scrutiny. A coalition of 11 state attorneys general also pressed the DOJ to examine the merger before Netflix exited the contest.

Even so, the DOJ approved the transaction in June. The current lawsuit expands the challenge to 12 states, led by Bonta, with Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington joining.

U.S. District Judge Araceli Martínez-Olguín issued a 14-day pause, temporarily stopping a deal that Paramount had hoped to close as early as July. The merger is now on hold until August 3, when a hearing will determine whether the freeze lasts longer.