Skydance Merger Under Fire: Subscribers Demand Separate Services

Skydance faces a significant legal hurdle as a group of streaming subscribers has filed a preliminary injunction motion in federal court. The plaintiffs are demanding that the acquired Warner Bros. Discovery businesses and assets, including HBO Max and Paramount+, be held and operated separately. This legal action aims to preserve the viability of these independent streaming services and prevent irreversible integration pending final adjudication.

The lawsuit, refiled by Alioto Law Firm and Foreman & Brasso, seeks a December 3 hearing before U.S. District Judge Araceli Martínez-Olguín. While acknowledging the merger's closure on September 30, the plaintiffs argue the court can still preserve its power to afford an effective remedy. The proposed order mandates maintaining separate operational functions and records for legacy Paramount Streaming and the acquired streaming business.

This challenge directly confronts Skydance's stated long-term plan to eventually combine HBO Max and Paramount+ into a single service. David Ellison, Skydance's CEO, previously confirmed this intention. The legal move, if successful, could significantly slow Skydance's strategy to address its substantial debt load, which exceeds $80 billion, especially as interest rates rise.

Amidst these legal complexities, Skydance shares have experienced a notable decline, trading down approximately 3% to under $7 on October 19, 2026. This performance follows the merger's finalization on October 6, 2026, when the stock was near $10. The company is expected to outline its strategy and address investor jitters over its debt during an upcoming earnings season presentation.