Warner Bros. Discovery (WBD) shares slipped to $25.60, marking a 21% discount to the $31 per share offer from Paramount Skydance after the latter paused its $110 billion acquisition bid. The pause signals growing uncertainty about the merger’s future.
Paramount’s decision came after a wave of legal challenges. Twelve U.S. state attorneys general along with the Writers Guild of America have filed antitrust lawsuits seeking to block the deal. Paramount stated it will wait until these issues are resolved or until June 1, 2027, before moving forward. This delay complicates integration plans and pushes back the timeline for any expected synergies.
Seaport Research Partners acted swiftly, downgrading WBD stock from Buy to Neutral. Analyst David Joyce commented, "With this additional delay and potential uncertainty, we think there are better areas to deploy capital." He also trimmed the Q2 revenue forecast by $236 million to $9.07 billion, citing underwhelming box office results for the film Supergirl, which grossed only $124 million worldwide insufficient to cover production and marketing expenses. Adjusted EBITDA estimates also fell by $219 million to $1.83 billion.
The advertising market's softness is exacerbating challenges for WBD. The absence of major sporting events like the FIFA World Cup, NBA playoffs, or NHL Stanley Cup this summer is dampening demand for ad-supported content, creating an additional headwind.
Investors will be watching WBD's Q2 earnings report due on August 6, and Paramount's results on August 4 could offer insights into how both companies plan to navigate the stalled merger. Until then, the sizable discount on WBD shares reflects growing skepticism in the market.
