Paramount warner
The acquisition has been halted by a U.S. court. IBT

Paramount Skydance announced it will delay its proposed acquisition of Warner Bros. Discovery to as late as June of next year as it faces legal challenges in the U.S.

The company had said it sought to complete the deal by the end of September, but called the development a "significant win."

"The result is exactly what we have sought from the outset: a direct path to a trial based on the evidence. This is the fastest and clearest way to prove that this transaction is good for competition, good for consumers, and good for creators, a conclusion dozens of competition authorities around the world have already reached," the company claimed.

"Plaintiffs' market definitions bear no relationship to the realities of today's marketplace and cannot withstand scrutiny. We look forward to proving our case at trial," it added. CNBC noted that the company's stock fell 3% on Friday following the development.

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U.S. District Judge Araceli Martinez-Olguin in Oakland had paused the acquisition earlier this week, saying attorneys general made a "strong showing" that it would amount to an unlawful decrease in competition.

Martinez-Olguin said the deal would likely violate antitrust law, considering it would give the company 27% of the market for the distribution of films. Combined with Disney, Universal, and Sony, four companies would account for the overwhelming majority of major studio releases, raising concerns about competition throughout the entertainment industry.

The judge also agreed with the states that letting the deal go through could present challenges if it is ultimately determined it was illegal, including job losses and the sharing of sensitive information.

The lawsuit in question is being led by California Attorney General Rob Bonta and joined by attorneys general from 11 other states. It marks the most significant legal challenge yet to one of the largest entertainment mergers in history.

If completed, the deal would combine some of the world's most recognizable entertainment brands under one corporate umbrella, including HBO, HBO Max, CNN, Warner Bros. Pictures, DC Studios, CBS, Paramount Pictures, MTV, Nickelodeon, Showtime and Paramount+.

State attorneys general argue that such concentration would give the combined company outsized influence over the production and distribution of films, television programming, and streaming content.

"The proposed merger would extinguish competition," the lawsuit argues, alleging consumers could face "higher prices, lower quality, and less content for film," while creative workers could encounter fewer employment opportunities and less bargaining power.

The lawsuit also argues that consolidation would strengthen the company's leverage over movie theatres, basic cable distributors, and, ultimately, audiences nationwide," while reducing incentives to invest in diverse programming and independent productions.