Paramount Skydance has agreed to pause its $110 billion acquisition of Warner Bros Discovery while a federal judge rules on a challenge from 12 states, according to court documents filed on Friday. The pause could cost the company up to $7 million a day in fees if the deal does not close by September 30.

Merger Faces Legal and Financial Risks

Paramount’s decision to halt the acquisition comes after a temporary restraining order was issued by US District Judge Araceli Martinez-Olguin — the order, requested by the states, froze the deal for several weeks. The companies have agreed to pause the deal until five days after the judge rules on the merits of the case, or until June 1, 2027, whichever comes first.

Paramount could owe as much as $1.7 billion in ticking fees to Warner Bros shareholders if the deal is delayed until June 2027, the company has called the states’ claims meritless and pledged to “vigorously defend” its merger.

States Challenge Merger Over Competition Concerns

The lawsuit was filed on July 13, led by California and joined by 11 other states; they argue that the merger would “extinguish competition” in Hollywood and reduce consumer choices, particularly for moviegoers and cable customers. New York Attorney General Letitia James called the halt to the merger a “critical victory in our efforts to uphold the law and protect the film and television industries.”

Paramount’s spokesperson said, “We look forward to proving our case at trial.” Similar merger challenges have taken an average of eight months for a judge to rule, according to a review of recent cases by the Reuters news agency.

Media Ownership Concerns and Political Tensions

There have also been concerns over a potential media stranglehold as the merger would have brought CNN, currently owned by Warner Bros, under the umbrella of Paramount. Paramount already owns CBS. Which has faced allegations of bias in favor of US President Donald Trump under the leadership of CEO David Ellison, and his father, tech billionaire Larry Ellison, is a known Trump ally.

The delay of the merger highlights the growing tensions around media consolidation and antitrust concerns in the entertainment industry; it also reveals the broader debate over the balance between corporate consolidation and consumer choice in a rapidly evolving media field.