Paramount Skydance will seek to force the states holding up its merger with Warner Bros. Discovery to pay for the fees and costs associated with the delay, according to a new filing in the antitrust case Monday.
Paramount is requesting a $1.88 billion bond that would be posted by the states behind the lawsuit. In July, a dozen state attorneys general led by California’s Rob Bonta filed to challenge the proposed $110 billion merger between Paramount and WBD.
The proposed deal would combine two storied film studios — Paramount and Warner Bros. — as well as put together a sprawling portfolio of pay-TV networks in the U.S. and streaming platforms HBO Max and Paramount+.
The group of state attorneys general said in its initial filing that the merger would violate the Clayton Antitrust Act, which is the more-than-100-year-old law that prohibits anticompetitive mergers and acquisitions.
In a statement from a Paramount spokesperson, the company pointed to the Clayton Antitrust Act and other federal law that calls on the plaintiffs — or states in this case — being required “to post a bond covering the potential harm from halting a transaction to litigate.”
“Here, every month of delay carries substantial and quantifiable financial consequences,” Paramount said in its statement.
In a statement in response, a representative for Bonta’s office said, “Paramount went into this process with eyes wide open. They are lying in a bed of their own making.”
Paramount has received regulatory approvals from the Antitrust Division of the U.S. Department of Justice, as well as all other global jurisdictions needed to move forward with the merger. But last month, Paramount agreed to delay the proposed acquisition to as late as June 2027 while the state AGs’ case heads to trial.
Paramount long planned to have the deal closed by the end of September. The delay could prove costly for Paramount.
Paramount agreed to a so-called ticking fee under the terms of the merger agreement, meaning that beginning Sept. 30 it would pay WBD shareholders an additional 25 cents per share, per quarter, until the deal closes. The amount could add up to roughly $650 million in cash value per quarter.
“By the time trial concludes and the parties submit their final briefs, Paramount will have paid Warner Bros. shareholders an unrecoverable $1.3 billion in ticking fees alone,” Paramount said in the filing. “Delay also threatens to nullify the regulatory approvals that Defendants have already spent months securing.”
“Absent security, even a complete victory on the merits would not restore a dollar of those extraordinary losses. That is precisely why federal law requires plaintiffs to provide security as a condition for receiving preliminary relief such as the court-approved order,” the filing says.
Bonta’s office in its statement said, “Paramount and Warner Bros. are two sophisticated companies who willfully decided to include a costly ticking fee as a provision in their merger contract. They knew this merger would undergo regulatory review; they knew it was not a done deal; and they chose to include it anyway.”
“What’s more, Paramount itself stipulated to the timing it is now protesting — they agreed to the dates and did not request a bond as a condition of agreeing not to close until after the trial, and potentially as late as June 2027. Now, they’re trying to get a do-over,” Bonta’s statement said.
In Paramount’s statement, the company said that the $1.88 billion amount is a “straightforward calculation of the maximum potential ticking consideration and financing costs from this litigation.”
However, the statement goes on to add that these are not the only costs associated with delaying the deal: “By virtue of what will be at least an eight-month delay in closing, there will be no integration and no ramped-up investment in content, production, and creative talent by the combined company. Of course, in addition, employees of both Paramount and WBD are also harmed by the uncertainties caused by the delay.”
In addition to California, the group of states suing to block the merger includes Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
