Bond Request Filed
In a significant legal move, Paramount Skydance has petitioned the federal court to order 12 states and the Writers Guild of America to secure a substantial $1.88 billion bond. This bond is intended to compensate for the financial setbacks caused by the postponed merger with Warner Bros. Discovery. The motion, filed on Monday, aims to amend the current court order that halts the merger's completion until the antitrust trial is finalized.[S1][S4]
Paramount is demanding a bond of $1,884,726,092.73, calculated to cover the maximum possible ticking fees and financing expenses. They cite federal legislation that mandates plaintiffs to secure a bond to mitigate potential damages resulting from delaying a transaction, ensuring a source of compensation for the affected party if the plaintiffs' case is unsuccessful.[S2][S4]
Ticking Fees and Delays
According to the terms of the merger, Paramount is obligated to compensate Warner Bros. investors with a quarterly ticking fee of 25 cents for each share. Beginning September 30, this penalty accumulates to approximately $7 million daily, which translates to about $650 million every quarter. Because the legal proceedings are not scheduled to wrap up until March 2027, Paramount projects that these delay-related fees will ultimately cost the company a minimum of $1.3 billion.[S1][S6]
The company also warns that the delay threatens to nullify regulatory approvals it has already secured from 68 jurisdictions, including the U.S. Department of Justice. If the deal remains unclosed after the trial, Paramount would need to seek approvals again at substantial expense.[S2][S6]
States Respond
The office of California Attorney General Rob Bonta dismissed the bond petition, characterizing the move as an effort to secure a second chance regarding the previously accepted postponement. State attorneys asserted that Paramount, as an experienced corporate entity, willingly consented to both the schedule and the associated ticking fee, meaning taxpayers should not have to shoulder the financial consequences of those choices.[S5][S6]
In July, a legal challenge was launched by a coalition of states, spearheaded by California's Attorney General Rob Bonta, against the proposed $111 billion merger between Paramount and Warner Bros. Discovery. They claimed that the merger would stifle competition in the movie theater and basic cable industries. The Writers Guild of America (WGA) also filed a lawsuit, stating that the merger could limit opportunities for writers to sell their work. The trial date has been set for March 2, 2027, by Judge Araceli Martinez-Olguin.[S4][S5]
