Amidst a shaky stock performance and big debts, Paramount and Warner Bros Discovery parent Skydance now faces a new court challenge to the company’s authority over its streaming assets and corporate strategy.
It may all end up being the legal equivalent of a tsetse fly, but the latest flex by a gaggle of streaming subscribers to put some brakes on Skydance’s “post-closing organizational changes” at HBO Max and Paramount+ comes as the David Ellison-run conglomerate hopes to bring in new equity investors to booster the bottom line.
“Plaintiffs request an order requiring Defendants Paramount Skydance Corporation and Skydance Media, LLC to hold and operate separately, pending final adjudication or further order, the acquired Warner Bros. Discovery businesses and assets necessary to preserve viable independent HBO Max and Paramount+ services, together with identifiable associated film and national-news operations, so the Court may order effective divestiture if Plaintiffs prevail,” reads a preliminary injunction motion filed in federal court October 16, serving as a refiling of an earlier case. “Plaintiffs seek preservation of separate operations and relief against irreversible integration, not rescission of the completed closing.”
In their long and likely rocky road to neuteringthe $111 billion Paramount-WBD merger that was made official September 30, the plaintiffs — Pamela Faust, Len Marazzo, Lisa McCarthy, Deborah Rubinsohn and Gary Talewsky — are also seeking a December 3 hearing before U.S. District Judge Araceli Martínez-Olguín on their antitrust request.
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The 16-page motion acknowledges that “the merger has closed.” But leaning into the big-picture ramifications of the price hike for the stand-alone streamer Discovery+ last week, the document adds: “The question now is whether the Court will preserve its power to afford an effective remedy.”
To that, the nine-point proposed order aims to go further than a widely criticized September 21 settlement that a coalition of 12 blue state attorneys general made with Ellison in their own antitrust battle.
For instance: “Separate operation. Defendants shall maintain separate identifiable operational functions for the Legacy Paramount Streaming Business and the Acquired Streaming Business. They shall maintain records sufficient to reconstruct separate revenues, expenditures, contractual rights, subscribers, content rights, and material assets of each business. They shall not eliminate the standalone Paramount+ or HBO Max subscription product or compel subscribers to migrate into a single replacement service.”
In other words, no cost-cutting relief for Team Ellison from one big streamer, at least not yet. Ellison has confirmed that after a bundling period, the home of Taylor Sheridan universe and the home of Lanterns and Game of Thrones spinoffs will become one.
“Long-term, the plan is basically to bring them together,” Ellison said in a post-merger presser two weeks ago. At added at the time: “I can’t be specific about that yet today.”
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Although Judge Martínez-Olguín dismissed a previous April-filed case for lack of standing, she did allow plaintiffs the right to refile, which they have via their San Francisco-based Alioto Law Firm and Foreman & Brasso firms. With that, timing is important here, as the full Paramount-WBD antitrust case is set for a dismissal hearing Wednesday; Martínez-Olguín was the judge who signed off on the settlement that turned out to be the final shoe to drop to make Ellison’s Hollywood dream deal a reality.
Interestingly, the new legal action is not slapping down the merger right now. Instead Faust, Marazzo, McCarthy, Rubinsohn and Talewsky are focused splitting up the studios in the short term. If the judge were to grant a preliminary injunction, it would certainly slow-walk the plans of Ellison and newly minted Skydance co-CEO Ynon Kreiz to tackle the $80 billion debt the melded company has.
That could prove a challenging result for Skydance outside Martínez-Olguín’s Oakland courthouse.
After just under two weeks of trading as one company, Skydance shares have been struggling, trading down about 3% middday Monday at under $7, near their low; the stock was pushing $10 when the WBD deal closed October 6. For context, Paramount Skydance hit a 52-week high of $17 in the fall of 2026 after those two companies merged.
With earnings season about to kick off, Skydance will face investors within weeks (date still TBA) and Wall Street is looking for Ellison to outline a strategy and address jitters over heavy debt. After one of the biggest leveraged buyouts in corporate history, that has become increasingly pressing as interest rates rise.
Skydance did not respond Monday to Deadline’s request for comment on the latest filing.
Jill Goldsmith contributed to this report.
