Five weeks ago, Paramount Skydance (PSKY) was willing to sell CNN to end this fight.
Chief Legal Officer Makan Delrahim said in August that a sale of the network was on the table as the company tried to clear the state antitrust suit blocking its takeover of Warner Bros. Discovery (WBD).
The terms under discussion are now much cheaper. Reuters reported Friday that independent content monitoring of CNN and a commitment on the number of theatrical releases are among the items being negotiated, citing people familiar with the matter. Nobody is selling anything.
Related: Paramount threatens key market exit over $110 billion mega deal
The price of peace just got cheaper
That shift is the actual story, and most coverage buried it under the stock pop.
California Attorney General Rob Bonta has said repeatedly that structural remedies, meaning divestitures, protect competition better than promises to behave. Monitoring and release quotas are promises to behave.
The Wall Street Journal reported Friday that the sides also discussed operating the studios separately for a period rather than merging them immediately. That is a delay, not a divestiture. On these terms, Paramount keeps the company whole.
A Paramount spokesperson declined to comment. The California Department of Justice said the talks are confidential, Reuters reported.
How a September close became a March trial date
The calendar explains why Paramount’s posture softened the state’s position, rather than the other way around.
Paramount agreed on Feb. 27 to buy WBD for $31.00 a share in cash, valuing it at $81 billion in equity and $110 billion including debt, according to Paramount. The Justice Department cleared it in June. Twelve states sued in July, and a court stipulation pushed the outside closing date to June 2027.
Then the meter started. The merger agreement adds “ticking consideration” for every day past Sept. 30:
- Paramount owes Warner Bros. shareholders $7 million a day until the deal closes, according to CNBC. That is roughly $650 million a quarter.
- The fee accrues at $0.00277778 per share daily, capped at $0.25 per 90-day period, per WBD’s proxy filing.
- A March 2027 trial of the states’ lawsuit would mean possibly $1.3 billion in fees before a verdict, in addition to financing and legal costs.
- Paramount has asked the states to post a $1.88 billion bond, with a hearing set for Sept. 24, Variety reported.
What the stocks said after the bell
Paramount Skydance closed Friday at $10.21, down about 3.9% on the session, then rose 7.6% after hours on the settlement reports, according to Seeking Alpha. Warner Bros. Discovery gained 8.3%.
WBD is no longer a media stock in any useful sense. It is a merger-arbitrage position: the share price tracks the odds of a $31 cash payout, not HBO Max subscriber growth. It closed Friday roughly 10% below that price, and Friday night’s move erased most of the gap.
The more revealing move was Paramount’s. Acquirers usually fall when a contested deal firms up, because certainty means paying.
Paramount rose because the delay now costs more than the concession does.
Analysts still refuse to price a clean close
While after-hours traders rushed to price in a resolution, Wall Street has not caught up to the market. Nineteen analysts polled by S&P Global rate WBD a consensus Hold with an average 12-month target of $29.82, according to StockAnalysis.
That number is the tell. In an all-cash deal, a target below the contracted $31 is not a valuation call. It is a discount for the chance that the deal dies.
The spread between desks shows how wide the disagreement runs. UBS carries a $31 target while Bank of America sits at $24, according to Yahoo Finance. Barclays reinstated coverage at Equal Weight on Sept. 16, and Bernstein reaffirmed its Hold a day earlier.
For investors, the practical read is blunt. Upside is capped near $31 plus accrued fees, while the downside if talks collapse is the unaffected price the deal replaced.
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State attorneys general are the new last hurdle
Paramount cleared the DOJ, the FCC and regulators in more than 65 countries. One state coalition still froze a $110 billion transaction for two months and extracted concessions from it.
A settlement could come as soon as this weekend, according to CNBC. That would end the state case, but not every obstacle.
The Writers Guild of America is suing separately over pay and working conditions, and a union spokesperson did not say whether it is part of the current talks, according to CNBC.
The precedent is what lasts. Federal clearance used to be the finish line for a megadeal. The next contested merger in media or tech will now budget for a second fight in state court, and for the ticking fee that makes losing it expensive.
