One More Time With Feeling: Paramount-WBD Merger Lawsuit Aims To Slow Walk Skydance’s Paramount+ & HBO Max Consolidation

Amidst shaky stock performance and big debts, Paramount & Warner Bros Discovery parent company Skydance now faces a new court challenge to their authority over their streaming assets and corporate strategy.

It may all end up being the legal equivalent of a Tsetse fly, yet the latest legal flex by a gaggle of streaming subscribers to put some brakes on Skydance’s “post-closing organizational changes” comes as the David Ellison-run corporation 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,” asserts a preliminary injunction motion filed in federal court on October 16 from Pamela Faust, Len Marazzo, Lisa McCarthy, Deborah Rubinsohn and Gary Talewsky. “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 neutering the $111 billion deal that was made official on September 30, the plaintiffs are also seeking is a December 3 hearing before U.S. District Judge Araceli Martínez-Olguín on their antitrust request – with a dose of reality.

“The merger has closed,” the 16-page motion acknowledges. Leaning into the big picture ramifications of the rise in stand-alone streamer Discovery+ prices 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 much further that the widely criticized September 21 settlement the 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.”

AKA – no cost cutting relief for Team Ellison from one big streamer, at least not yet. David Ellison has confirmed that after a bundling period, the home of Taylor Sheridan universe and the home of Lanterns and Game of Thrones spin-offs will become one. “Long-term, the plan is basically to bring them together,” Ellison said in a post-merger approval presser two weeks ago. At the October 6 gathering, he then noted: “I can’t be specific about that yet today.”

Though Judge Martínez-Olguín dismissed the initially April filed case back in August for lack of standing, she did allow them the right to refile, which the Alioto Law Firm and fellow San Francisco based Foreman & Brasso represented plaintiffs have now done. With that, timing is important here, as the whole case was set for a full dismissal hearing on October 21. Note: Martínez-Olguín was also overseeing the AGs and WGA antitrust action against Para and WBD. Earlier this month, after a last minute much ado about nothing, she was the judge who signed off on the settlement that was the final shoe to drop to make Ellison’s Hollywood dream deal a reality

Interestingly, the new move is not slapping down the merger itself right now. Instead Faust, Marazzo, McCarthy, Rubinsohn and Talewsky are focused splitting up the studios in thh short term. A move that, if approved by the judge with an PI will certainly slow walk the plans of Ellison and newly minted Skydance co-CEO Ynon Kreiz to tackle the over $80 billion debt the melded company has.

A situation that could have a challenging result for Skydance outside Judge Martínez-Olguín’s Oakland courthouse.

After just under two weeks of trading as one big company, Skydance shares have been struggling.

They are trading down about 3% in middday trading 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, Skydancewill be facing investors within weeks (date still TBA) and Wall Street is looking for CEO Ellison to outline a strategy and address jitters over SKYD heavy debt. After one of the biggest leveraged buyouts in corporate history, that’s become increasingly pressing as interest rates rise.

Skydance did not respond today to Deadline’s request for comment on the latest filing and motion by the streaming subscribers.