The Warner Bros. water tower appears at Warner Bros. Studios in Burbank, Calif., on Dec. 5, 2025. AP Photo/Jae C. Hong
Warner Bros. Discovery executives say they are confident the company’s proposed $110 billion merger with Paramount Skydance will go through despite legal challenges and a resultant decline in second-quarter profits.
“We have every expectation the transaction will close, and the company will be performing even better than the plan that we presented to [Paramount] when we did our deal,” Warner Bros. Discovery CEO David Zaslav said Thursday during an earnings call with analysts.
Warner’s distribution revenue rose 1 percent to $4.95 billion during the quarter, driven by a 10 percent increase in streaming revenue to $3.1 billion. However, that growth was more than offset by continued declines in the company’s cable television networks and a weaker film and television slate.
Advertising revenue from the company’s television networks fell 22 percent, largely because Warner lost the rights to broadcast NBA games after the 2025 season. The company had carried NBA games for almost 40 years before failing to secure a new agreement, with NBCUniversal replacing it as one of the league’s primary media partners.
Distribution revenue from Warner’s traditional television networks also declined, reflecting in part a 10 percent decrease in subscribers.
Overall revenue fell 11 percent to $8.7 billion from $9.8 billion a year earlier. Net income attributable to the company dropped to $149 million from $1.58 billion.
The decline was partly driven by $1.1 billion in pretax expenses related to the amortization of acquisition-related intangible assets, content fair-value adjustments, and restructuring, according to the report.
Warner continues to operate as an independent company while awaiting completion of its sale to Paramount.
The proposed transaction has received approval in several countries. Most recently on Thursday, the British government green-lighted the acquisition on competition and public-interest grounds after Paramount made new promises related to programming and news coverage in the United Kingdom.
According to the government’s announcement, Paramount offered a series of protections intended to preserve a diverse range of broadcast and on-demand services, maintain distinct editorial identities, and safeguard the independence of major British news programs.
In the United States, however, the merger has been delayed by a federal antitrust lawsuit filed by the attorneys general of 12 states, including California—home to Warner’s flagship Burbank studio—and New York, where both companies are headquartered.
The deal also faces a separate legal challenge from the Writers Guild of America, which argues that combining two of Hollywood’s five major studios would concentrate too much demand for writers of top-grossing films and episodic television series, weakening their bargaining power.
The federal judge overseeing the states’ lawsuit has scheduled a trial to begin in March 2027.
Under the terms of the merger agreement, Warner would be entitled to a $7 billion breakup fee if the transaction has not closed by June 4, 2027.
