On Friday, David Ellison’s Paramount shocked much of the media industry by agreeing to put its blockbuster merger with Warner Bros. Discovery on ice until next June, as the company gears up for a major trial over the states' antitrust challenge. The pause is the latest update in what is shaping up to be one of the most consequential antitrust trials Hollywood has faced in decades, with the saga far from over.

The move buys more time for both sides, keeping the $111 billion deal alive. But it also puts Paramount on the hook for potentially billions of dollars in ticking fees and other costs as the legal fight drags on. Both Paramount and California Attorney General Rob Bonta quickly declared the standstill agreement a win for their respective sides. Bonta hailed the delay as a "tremendous win," while Paramount insisted the arrangement provides the most seamless path to proving their position that the merger is lawful.

But beyond the spin, the agreement raises a central question: Does Paramount’s willingness to endure another year of litigation reflect confidence in its legal position, or a recognition that it has few options left to exert leverage?

Status asked eight antitrust experts to weigh in on what Friday's agreement actually means, which side it benefits most, and where they believe the merger is headed over the next year. Their answers revealed no clear consensus. While some believe Paramount still holds the stronger legal hand, others argue the mounting costs and uncertainty now make it increasingly plausible that the deal never closes at all.

Our questions and their answers, lightly edited for style and clarity, are below.

Every month this case remains unresolved, the economics of the deal become more expensive for Paramount because of ticking fees and other delay costs. At what point, if any, can those mounting costs start to affect a company's litigation strategy or willingness to push forward with a deal?

John Newman, Herff Chair of Excellence, University of Memphis School of Law:

Paramount put itself in a tough spot here. Paramount seems to have been assuming this deal would sail through review, and even if it drew a challenge, Paramount’s lawyers could quickly persuade a judge to dismiss the case. That strategy predictably failed, leaving Paramount stuck between a rock and a hard place. Merging companies often do abandon their deals when facing the prospect of protracted litigation, as Nvidia did with its purchase of ARM a few years back. At some point, Paramount will start to face serious shareholder pressure, and that can create pressure to walk away from a bad deal.

Shubha Ghosh, Crandall Melvin Professor of Law, Director, Syracuse Intellectual Property Law Institute:

Most deals have a “time is of the essence” clause or incentives to accelerate performance. Litigation or other delays may excuse their enforcement. It is unlikely the parties will back out voluntarily. If matters get costly, Paramount and WBD can renegotiate the terms.

William Kovacic, GW Global Competition Professor of Law and Policy; Professor of Law; Director, Competition Law Center:

The longer it takes to wrap up a transaction, the more things that can go wrong often do go wrong. The costs of finishing this deal go up. Your employees get restless and consider leaving. Uncertainty starts to create discord and doubt in your routine commercial relationships.

Fiona Scott Morton, Theodore Nierenberg Professor of Economics at the Yale University School of Management and an Adjunct Professor at Yale Law School:

In general, mergers are time-sensitive because whatever the strategy is for getting the deal done, it depends on technology and demand and what rivals in the marketplace are doing. The longer the merger is delayed, the less good the strategic fit. The lesson we learn is that the government can cause a firm to abandon its merger if the litigation is both forecast to last a long time and creates uncertainty.

George Hay, Charles Frank Reavis Sr. Professor of Law, Cornell:

A combination of the costs and a mounting concern that this may not be such a great deal for Paramount given the high debt they will incur and, of course, a nontrivial risk that the courts will ultimately reject the deal. Don’t be surprised if they pull the plug.

Eleanor Fox, Professor of Law Emerita, New York University School of Law:

The fact that Paramount is willing to pay the ticking fee is some indication of how valuable this deal is to Paramount.

Both California Attorney General Rob Bonta and Paramount have portrayed the standstill agreement as a favorable outcome. Who actually benefited more, what practical advantages does each side gain from this arrangement, and which side would you say improved its position the most?

Newman: Paramount is pretty clearly trying to spin a bad loss as a victory. From the beginning, Paramount has been pressuring the judge to move extremely quickly. Paramount pivoting so drastically away from its own strategy suggests they got burned pretty badly here. Practically, that lets the states focus their time and resources on proving their own case, rather than having to simultaneously disprove Paramount’s argument about cordcutters and streaming being the future.

Ghosh: Hard to say who benefited more. The standstill allows the government to investigate more thoroughly against a changing environment and gives Paramount a chance to lessen any damages that arise from any finding of liability.

Kovacic: The companies receive more time to marshal their best evidence and prepare the narrative that will be most persuasive to the court. But the states also will use the extra time to improve their case, and the states have retained an outstanding law firm to help them do it. All in all, my sense is that the extended timetable poses more risks than benefits to the companies.

Daniel Crane, Richard W. Pogue Professor of Law, University of Michigan Law School: Bonta and the other state AGs got to claim a political win by delaying the deal's closing by a year. A year is a long time in the political cycle, and that gives them something to show. They also get more time to prepare their case.

The delay obviously costs Paramount a lot of money in deal fees, and no CEO likes to delay a big business transaction that will keep both companies wondering whether they will end up together or remain competitors. But Paramount clearly didn't like the prospects of a preliminary injunction hearing, especially after the judge granted the TRO. Now, there's time for the issue to be decided in a full trial, where the states have a higher burden of proof. So it's not hard to see why Paramount would agree to the delay.

Morton: Paramount must be dissembling here, as their whole strategy—based on what I read in the news—was to move fast while offering money (like legal settlements) and benefits (like changing CNN) to the White House in the hope that it would instruct the regulator to allow what is a controversial transaction. AG Bonta is correct that the standstill agreement favors his side as it prevents the firms from "scrambling the eggs." Closing the transaction would make the merger effectively a done deal regardless of what a court might say later. Now the states have time to put together a case and explain why they think there will be harm to competition.

Hay: No question it’s a win for the states and a big blow to Paramount (unless it provides a way for them to exit inexpensively). It also shows the critical role of state enforcement now that the DOJ has essentially abandoned even-handed enforcement.

Fox: Paramount preferring a standstill agreement to litigating a preliminary injunction may suggest that it has worries about preliminary findings that the merger is anticompetitive. Plaintiff burden is higher at a full trial. 

What does Paramount's willingness to accept a standstill through next June tell us about its legal strategy? Should it be viewed as a sign of confidence in its chances of prevailing, a pragmatic effort to preserve the transaction, or something else?

Newman: After losing at the initial temporary restraining order stage, I think Paramount correctly assessed its chances of winning at the preliminary injunction in early August of this year as basically zero. Paramount had come out of the gates with a lot of swagger, making moves that read as almost cocky. This is a total shift; they lost the early battle badly, and they know it.

Kovacic: It seems that the companies believe the additional time will enable them to develop the best evidence possible and refine their legal and economic strategy to the highest level possible. It is also possible that the companies feared they would suffer initial setbacks in this preliminary phase of the case, and they did not want to face more adverse results that would undermine investor and employee confidence in the deal.

Crane: Paramount's decision to accept the delay suggests that they are taking a long view of the litigation and willing to grind it out. … Paramount may even be willing to play out this case through Supreme Court review. SCOTUS hasn't taken a merger case since 1976, so it's long overdue, and this case sets up the legal issues in a way that may well interest the Court.

Fox: No, not a sign of confidence. I think it may be a sign of worry that, in a preliminary injunction hearing, the court would make findings of fact that support a conclusion of the merger’s (probable) illegality. 

Looking ahead to this time next year, what do you see as the most likely outcome for this merger? What key developments will determine whether the deal ultimately proceeds, is modified, or is abandoned?

Mark Lemley, William H. Neukom Professor, Stanford Law School: In this case, the merger will likely never be approved at all. The government signed off on it only because of political intervention; the Trump White House pushed this merger over Netflix because it would give right-wing billionaires control over still more news sources, including CNN.

I'm not sure why Paramount agreed to this deal, except that they were reasonably confident they would lose at the preliminary injunction hearing after the court's ruling on the TRO.

Newman: It’s really hard to predict with certainty because there are so many moving parts here. When the initial complaints by states, consumers, and workers got filed, I predicted the case would be tough but winnable. I still think that’s true, but it looks a little easier and more winnable now. If the companies were smart, they would probably just walk away from this deal. But on Paramount’s side, I don’t see a lot of smart, rational behavior. So who knows—Paramount may stick it out until the bitter end.

Kovacic: It seems possible that the parties still could devise a settlement that would give the states confidence that the deal will not undermine the interests of traditional theater operators and the collection of labor groups that support them. The states adamantly have said that only strong structural relief is a viable solution, short of prohibition. So, one year out, I anticipate that the states prevail in the trial before the district court, unless the states accept a settlement built upon major structural remedies.

Crane: Even apart from the legal questions about what substantive standards govern merger law, I'd rather have Paramount's hand than the states'. The states portray this as a 5-to-4 merger based on the idea that only traditional movie studios that produce movies for theater distribution count. That strikes me as a very 1970s view of the world. When you combine Paramount's likely advantage on the law and its argument that technological, economic, and social change undermines the states' view on movies, I'd give Paramount a decided advantage.

Hay: Most likely outcome is that the deal is abandoned unless the states and Paramount can cut a deal soon.

Fox: This is hard to predict. The states raise serious questions. But Paramount has some possibly good defenses. One of the most serious problems is the merger's threat to free speech and truthful news independently reported and not compromised by what the White House wants. Media diversity used to be a viable issue in antitrust analysis, but it is not likely to be any more.

[Data via Box Office Mojo]