Paramount Moves Closer to Clearing a Major Antitrust Hurdle. Here’s How That Impacts Its Warner Bros. Discovery Acquisition.

Paramount Moves Closer to Clearing a Major Antitrust Hurdle. Here’s How That Impacts Its Warner Bros. Discovery Acquisition.

Bram Berkowitz, The Motley Fool

Mon, September 21, 2026 at 8:43 PM GMT+3 4 min read

Paramount Skydance (NASDAQ:PSKY) is reportedly one step closer to overcoming a major antitrust lawsuit that could pave the way for it to close a proposed $110 billion acquisition of Warner Bros. Discovery.

After a bidding war with Netflix, Paramount Skydance announced on Feb. 27 that it would acquire Warner Bros. Discovery for an enterprise value of $110 billion, including roughly $29 billion in debt.

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The deal would bring together streaming services like HBO Max and Paramount+, as well as television networks and channels like CBS and CNN.

Investors anticipated that a deal of this size, merging so many different assets in the media space, would draw regulatory scrutiny, and it did.

The attorneys general (AG) in California and 11 other states sued to block the deal on antitrust grounds. According to media reports, Paramount could be close to settling with the states, although not without concessions.

As of 1:19 p.m. ET on Sept. 21, Paramount and Warner Bros. stocks traded roughly 7.8% and 11% higher on the day, respectively.

Here's how this news could impact the acquisition.

Image source: The Motley Fool.

Steps to preserve the film industry and network independence

State AGs sought to block the merger, arguing that it would create too much power under one roof in the film and cable television industries.

Other concerns included maintaining editorial independence at CBS and CNN, which operate major news divisions, and the impact that the financial pressures of running a publicly traded company could have on the film and television sector.

According to The Wall Street Journal, The Writers Guild of America also sued to block the merger, arguing that it would lead to fewer jobs for Hollywood screenwriters.

As part of the concessions, Reuters, citing anonymous sources, reported that the combined company would be required to make and release 30 movies each year or face a $30 million fine per movie. There would also need to be independent editorial boards for CNN and CBS.

The Journal also reported that failing to release 30 movies per year could result in a penalty requiring Paramount to potentially sell its stake in the film studio Miramax, which has produced countless Oscar-winning movies.

The settlement may also require Paramount to sell some of its cable channels. While the reports suggest a deal may be coming, one has not yet been reached, as of this writing.

Financial implications of the merger

Paramount did not arrive at an agreement with Warner Bros. easily. In fact, Netflix was the first to announce a deal to acquire certain assets from Warner Bros.

However, Paramount, run by David Ellison, the son of Oracle Founder Larry Ellison and one of the richest people in the world, made it clear that it wanted Warner Bros. and was willing to spend whatever was necessary.

Not only did Paramount raise its bid for Warner Bros. equity to $31 per share, but it also had to pay Netflix a $2.8 billion termination fee and attached a ticking fee.

The ticking fee was intended to ease concerns among shareholders regarding the antitrust challenges that many investors expected to arise.

Paramount said that if the transaction did not close by Sept. 30 of this year, WBD shareholders would receive an additional $0.25 per share for each quarter until closing. And the ticking fee would be applied on a daily pro-rata basis. This amounts to an additional $650 million per quarter.

So, clearly, Paramount is incentivized to close the deal as soon as possible.

I also think it's important for the company to begin integrating the two companies as soon as possible and to start building a stronger media conglomerate.

Closing the deal is just one of many challenges Paramount faces. The combined company is looking at $79 billion of net debt.

Meanwhile, the sector faces challenges from shifting consumer preferences, primarily toward short-form content, and from the potential impact of artificial intelligence on content creation.

It's in management's best interest to get the deal closed shortly. Then the real work will begin.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix, Oracle, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.

Paramount Moves Closer to Clearing a Major Antitrust Hurdle. Here's How That Impacts Its Warner Bros. Discovery Acquisition. was originally published by The Motley Fool