WBD, PSKY Stocks On Track For Worst Day Since December As States Reportedly Plan Lawsuit Against $110B Merger

• Paramount Skydance announced the definitive agreement to acquire Warner Bros. Discovery in February. 
• Both companies’ boards unanimously backed the transaction, describing it as the creation of a “next-generation global media and entertainment company.”
• The companies have targeted a third-quarter 2026 closing, subject to all remaining regulatory approvals and other customary conditions.

Shares of Warner Bros (WBD) fell 3% on Friday following reports that a group of U.S. states is preparing a lawsuit to block Paramount Skydance’s (PSKY) takeover of it.

It was not immediately clear which states would sue, Reuters reported, citing sources. The report also noted that California Attorney General Rob Bonta had told Reuters that his office would decide whether to take action soon.

PSKY shares traded 8% lower at the time of writing, on track for its worst day since December, if losses hold. WBD shares are also on track for the worst day since mid-December.

Deal Background

Paramount Skydance announced the definitive agreement to acquire Warner Bros. Discovery in February. Under the terms, Paramount Skydance will pay $31 per share in cash for all outstanding shares of Warner Bros. Discovery, valuing the equity portion at roughly $81 billion and the total enterprise value at about $110 billion.

The deal emerged after a months-long bidding process. Warner Bros. Discovery had explored splitting into two companies before putting itself up for auction in late 2025. Netflix initially expressed interest but ultimately stepped away, clearing the path for Paramount Skydance — led by CEO David Ellison, son of Oracle co-founder Larry Ellison — to prevail.

Warner Bros. Discovery shareholders overwhelmingly approved the merger in April.

Both companies’ boards unanimously backed the transaction, describing it as the creation of a “next-generation global media and entertainment company” that would expand consumer choice, strengthen content pipelines, and better compete in a streaming-dominated landscape.

Regulatory Path

The deal still requires clearances from multiple regulators, including U.S. authorities such as the Department of Justice and Federal Communications Commission, as well as bodies in the United Kingdom and elsewhere.

The companies have targeted a third-quarter 2026 closing, subject to all remaining regulatory approvals and other customary conditions. It will forge one of the largest entertainment conglomerates in history by uniting two iconic studios’ vast film and TV libraries — from Warner’s Harry Potter, DC Comics, and HBO Max originals to Paramount’s Mission: Impossible franchise and CBS network assets — while combining Paramount+ and HBO Max into a single streaming powerhouse potentially serving nearly 200 million subscribers.

How Did PSKY, WBD Retail Traders React?

On Stocktwits, retail sentiment around PSKY fell from ‘neutral’ to ‘bearish’ territory while message volume stayed at ‘high’ levels.

Meanwhile, sentiment around WBD fell from ‘neutral’ to ‘bearish’ levels, coupled with ‘high’ retail chatter.

A Stocktwits user dismissed the lawsuit, saying it won’t stop anything.

Another user said that Warner Bros will be out of business if the lawsuits prevail.

While PSKY shares have fallen 25% this year, WBD has fallen 7%.

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