Paramount Skydance is seeking a $1.88 billion bond from the states attempting to block its planned merger with Warner Bros. Discovery, arguing that the legal challenge is creating significant financial losses.
The request follows a July lawsuit brought by 12 state attorneys general, led by California’s Rob Bonta, who challenged the proposed $110 billion merger. The transaction would combine two major Hollywood studios, their U.S. television networks and streaming services Paramount+ and HBO Max.
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A Costly Delay For Paramount
Paramount had originally expected to complete the deal by the end of September. Instead, the company agreed to delay the transaction until as late as June 2027 while the states’ antitrust case moves toward trial.
The company says the delay could become increasingly expensive because of a “ticking fee” included in the merger agreement. Beginning Sept. 30, Paramount will owe WBD shareholders an additional 25 cents per share every quarter until the transaction closes. That could amount to around $650 million per quarter.
Paramount estimates that ticking fees alone could reach $1.3 billion by the time the legal process is completed. The proposed $1.88 billion bond would cover those payments as well as financing costs linked to the litigation.
The company has already received approval from the U.S. Justice Department and other global regulators, but argues that some of those approvals could be jeopardized by a prolonged delay.
States Push Back
The states maintain that Paramount and WBD accepted the financial risks when they agreed to the merger terms. Bonta’s office said the companies knew the transaction would face regulatory scrutiny and voluntarily included the ticking-fee provision.
The state also pointed out that Paramount agreed to the trial timeline without requesting a bond at the time.
Paramount says the costs go beyond shareholder payments. The prolonged uncertainty could also delay investments in content, production and creative talent that would otherwise be made by the combined company.
The lawsuit was filed by California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
