Co-writer on the original film and Will Ferrell's production partner Adam McKay announced on his Twitter page that the project has been axed by the studio.
"So bummed. Paramount basically passed on Anchorman 2. Even after we cut our budget down. We tried," he wrote.
An insider close to the studio has said that Paramount didn't officially pass, but rather wanted a lower budget than McKay and Farrell presented, one which the duo felt was too low to make the film successfully.
Paramount and representatives for McKay have yet to comment further on the movie's future.