Paramount seeks $1.88 billion bond over Warner Bros merger lawsuit

WASHINGTON: Paramount Skydance is asking a US judge to make California and 11 other states challenging its proposed acquisition of Warner Bros Discovery post a $1.88 billion bond to cover costs the company says it could incur if the lawsuit delays the $110 billion deal.

According to Reuters, Paramount said the bond would protect it against losses arising from a prolonged legal battle, including daily payments to Warner Bros shareholders under the merger agreement.

The company is required to pay $7 million a day if the transaction does not close by September 30. Paramount estimates it will have paid about $1.3 billion in unrecoverable “ticking fees” by April, when the trial is expected to conclude and final legal briefs are submitted.

It also estimates that the delay could result in $1.7 billion in ticking fees through June 1, along with another $190 million in incremental financing costs if the merger is pushed to June 2027.

Paramount has asked the court to require the states to post the bond so the company can recover those losses if the merger is ultimately approved. It argued that the states have sufficient resources to provide the security.

The request comes after Paramount agreed in late July to pause its acquisition of Warner Bros until a court rules on the states’ challenge.

California and 11 other states sued on July 13 to block the transaction, arguing that the combination would create a media giant with greater power to raise prices across film and television.

California attorney general Rob Bonta pushed back against Paramount’s request, arguing that the companies themselves agreed to the ticking-fee provision in their merger contract.

Bonta said Paramount had entered the transaction knowing the terms and accused the company of attempting to pressure the states into dropping their challenge.

The Writers Guild of America has also filed a lawsuit seeking to challenge the deal, adding another layer of legal uncertainty to Paramount’s plan.

The proposed acquisition is central to CEO David Ellison’s strategy to reshape Paramount into a larger entertainment company capable of competing more directly with streaming and media giants such as Netflix and Disney.

The US Justice Department has already approved the deal, although that approval is due to expire on February 19. Paramount said regulatory authorities in at least 68 countries have either approved the transaction or decided not to challenge it.

The state lawsuits therefore remain the main obstacle to closing the deal, according to the company.

The legal timetable is becoming increasingly expensive for Paramount. A review of recent merger challenges found that similar cases have taken an average of about eight months for judges to reach a decision.

With the trial against the states scheduled for March, the $110 billion merger now faces a race against both the courtroom clock and a $7 million-a-day ticking fee.