Warner Bros Deal: Paramount Seeks $1.88 Bn Bond From 12 US States Over Delay Costs

Paramount Skydance has asked a US judge to require 12 states challenging its planned acquisition of Warner Bros Discovery to post a $1.88 billion bond to cover costs if the legal fight delays the $110 billion merger, according to a Reuters report.

Paramount said it must pay $7 million a day if the transaction does not close by September 30. The company argued that the bond would allow it to recover losses if a court ultimately approves the merger but the states’ lawsuit causes the deal to be delayed.

The company also pointed to the timing of the legal proceedings. The trial is scheduled for March, with final legal briefs expected in April. By then, Paramount estimates it will have paid about $1.3 billion in unrecoverable “ticking fees” to Warner Bros shareholders.

Deal Delay Could Add To Costs

Paramount said the merger delay could result in significant additional expenses. It has already agreed to pay the ticking fees as part of its effort to acquire Warner Bros.

The company said it would face $1.7 billion in ticking fees through June 1, along with another $190 million in financing costs if the merger is pushed to June 2027.

Paramount also noted that approval from the US Justice Department is due to expire on February 19. It argued that the states have enough resources to post even a large bond.

States Challenge $110 Bn Merger

California and 11 other states sued in July to block the deal, arguing that the merger would create a media company with excessive power to increase prices in film and television. The Writers Guild of America has also filed a lawsuit challenging the transaction.

California Attorney General Rob Bonta has opposed Paramount’s request, arguing that the companies agreed to the ticking-fee arrangement themselves. He said Paramount had accepted the deal’s timing before seeking to change it.

Paramount said regulatory authorities in at least 68 countries have already approved the transaction or decided not to challenge it, leaving the lawsuits as the main obstacle to closing the deal.

The legal battle threatens CEO David Ellison’s plan to turn Paramount into a larger competitor to Netflix and Disney. A Reuters review of recent merger cases found that similar challenges have taken an average of eight months for a judge to decide.