States and writers oppose Paramount’s $1.88 billion bond request

California’s Attorney General, Rob Bonta, went to a federal court in Oakland on 31 August. Eleven other states and the Writers Guild of America joined him. They asked the judge to say no to a request from Paramount Skydance. Paramount wants them to put up 1.88 billion dollars as a guarantee.

Paramount is buying Warner Bros. Discovery for 110 billion dollars. The states are challenging that purchase in court under competition law. Paramount says the case is stopping the deal from closing, and that this costs it money. It wants the states to cover that money.

The argument is about a daily payment, sometimes called a ticking fee. Under the merger agreement, Paramount owes Warner Bros. Discovery shareholders 7 million dollars for every day the deal stays open after 30 September. Paramount told the court that by the time the case is argued in the spring it will have paid out about 1.3 billion dollars it can never get back. It said the bill could reach 1.7 billion dollars in fees, plus about 190 million dollars in financing costs, if the deal slips to June 2027.

The states answer that Paramount created this problem itself. The Reuters report on the filing says Bonta argued that Paramount offered the daily payment to pull Warner Bros. Discovery away from a rival bid by Netflix. Paramount then promised, of its own accord, not to close the deal until the state case ends or until 1 June 2027, whichever comes first. So, Bonta argued, the losses are Paramount’s own doing, and taxpayers should not have to cover them.

A guarantee this large is rare in a merger case

Requests for a guarantee this large are rare in merger cases. Paramount’s view is that people who block a deal should carry the cost if their case fails. It says the states cannot hold up the closing and take no responsibility for the delay. If the judge agrees with Paramount, state attorneys general may think harder before challenging big media deals. If the judge says no, Paramount alone carries the daily fee.

The timing is also difficult for the buyer. Press.pl notes that 68 regulators have already cleared the merger, including the European Commission. The competition trial is due to open on 2 March 2027. The Writers Guild of America has brought its own case. It told the court it is worried that a combined studio would have too much power over prices in film and television.

Final arguments in the Paramount case are due in April 2027

A decision on the guarantee is expected before the daily fee starts at the end of September. Final written arguments in the main case are due in April 2027. So even a quick decision on the guarantee will not change the calendar. Paramount and Warner Bros. Discovery will spend at least the next seven months, and possibly the next nine, paying for a deal they cannot yet complete.