Paramount Skydance and Warner Bros Discovery have agreed to delay their US$110 billion merger until 2027 as legal challenges threaten to derail one of the media industry’s biggest-ever deals.

Under an agreement filed in a US federal court, the companies will remain completely separate until June 1 next year, or five days after a judge rules on whether the acquisition breaches US antitrust law, whichever comes first.

The pause follows legal action from 12 US states, led by California, and a separate lawsuit from the Writers Guild of America, which argue the merger would reduce competition, increase consumer prices and weaken employment opportunities and bargaining power for writers and production workers.

The agreement cancels a preliminary injunction hearing scheduled for August 3, with all parties expected to propose new trial timetables by July 31.

Paramount said the move provided a direct path to trial and would allow it to prove the combination was “good for competition, good for consumers and good for creators”.

The US Department of Justice approved the transaction in June, while European regulators granted conditional clearance after requiring Paramount to exit a regional film distribution arrangement with Universal Pictures.

However, the extended US delay could prove expensive. Paramount has reportedly agreed to pay Warner Bros shareholders about US$7 million a day if the transaction remains unfinished beyond September 30.

The court battle also has major implications in Australia, where Paramount-owned Network Ten is facing mounting uncertainty.

As revealed on ChannelNews recently, Paramount is open to selling the struggling broadcaster as it cuts costs and disposes of non-core international assets ahead of the Warner Bros deal.

Ten has since axed its flagship 10 News+ current affairs program, while reports suggest hundreds of jobs across news, sales and current affairs could be cut and production of some bulletins outsourced.

A prolonged merger process could increase pressure on Paramount to accelerate asset sales and cost reductions, potentially making Ten one of the most immediate Australian casualties of the global restructuring.

The proposed merger would combine Paramount+, CBS and Network Ten’s parent company with HBO Max, CNN, Warner Bros studios and Discovery’s global television assets.