A California federal judge has scheduled a 12-day trial beginning March 2, 2027 to resolve the antitrust lawsuit blocking Paramount Skydance Corp.'s $110 billion acquisition of Warner Bros. Discovery Inc.. US District Judge Araceli Martnez-Olgu in Oakland, California will hear cases brought separately by a group of states and the Writers Guild of America in a single trial. According to NDTV, Paramount had initially sought a trial in November to minimize delay costs, but the judge's decision means the legal battle will extend into 2027. Both lawsuits allege that allowing the media companies to combine operations would hurt competition in film and television production and distribution.
Warner Bros Discovery missed second-quarter revenue estimates on Thursday, hurt by lackluster box-office performance and soft advertising sales due to the absence of National Basketball Association (NBA) games. Studio revenue slumped 39% during the quarter, with releases including Mortal Kombat II and Supergirl failing to replicate the blockbuster success of last year's top grosser A Minecraft Movie and Sinners. The absence of NBA games broadcasts this year, coupled with declines in domestic linear TV audiences, drove a 22% drop in advertising revenue for Warner Bros. Higher energy prices linked to conflicts in Iran and Ukraine weighed on international advertiser spending, adding to the company's revenue challenges.
Paramount has agreed to sign legally binding contracts with major theater chains guaranteeing 30 movies annually if the Warner Bros. acquisition proceeds. According to NDTV, Paramount has offered three-year agreements to AMC Entertainment Holdings Inc. and Cineworld Group's Regal Cinemas, requiring exclusive theater releases for at least 45 days and prohibiting online streaming for at least 90 days. The written commitments provide assurances that CEO David Ellison won't change his mind later, with penalties for non-compliance. These agreements could serve as a template for settling the antitrust lawsuit brought by 12 states who claim the deal will harm the movie business by reducing output and costing jobs.
The merger faces mounting financial pressure with $7 million per day ticking fees to Warner Bros. shareholders beginning October 1, potentially totaling more than $1.6 billion by June 2027. According to NDTV, the companies have until June 4, 2027 to close the deal under the merger agreement, after which either side can back out. If the deal is abandoned at that time, Paramount will owe $7 billion to Warner Bros. The financial stakes are particularly significant given Paramount's $24 billion funding commitment from sovereign wealth funds of Saudi Arabia, Qatar, and the UAE, with the three Middle Eastern funds owning 38.5% of the combined entity. Ellison has reaffirmed production commitments of 30 theatrical films and 170 television series annually under the combined company.
The merger has created a divided cinema industry, with AMC and Regal backing Ellison while Cinema United, a lobbying group representing theater chains, remains opposed. AMC CEO Adam Aron published an op-ed in Variety, while Regal CEO Eduardo Acuna stated that a long court fight would be bad for the movie business. The merger remains tied up in court, with California and 11 other states seeking to block it on antitrust grounds. Britain's Competition and Markets Authority cleared the deal, stating it was 'unlikely to harm competition in the country.' Paramount has already tried to negotiate settlements with California Attorney General Rob Bonta, who is leading the state lawsuit, while the companies maintain the merger is 'lawful, pro-competitive, and raises no antitrust concerns.'
