Paramount Seeks $1.88 Billion Bond From States Challenging Warner Bros. Merger

Paramount Skydance is asking a federal judge to require 12 states challenging its $110 billion acquisition of Warner Bros. Discovery to post a $1.88 billion bond, arguing the legal fight could leave the company with substantial costs if the merger is ultimately allowed to proceed.

The request, filed Monday in federal court in Oakland, centers largely on payments Paramount says will begin accumulating if the transaction does not close by September 30. Under the merger agreement, Paramount must pay Warner Bros. Discovery shareholders about $7 million for each additional day the deal remains unfinished.

Paramount estimates those payments, known as ticking fees, could reach about $1.3 billion by the end of trial and post-trial briefing in April. The company says they could rise to roughly $1.7 billion if the merger remains on hold through June 1, with financing costs adding another $190 million.

The $1.88 billion request is not a damages award, and the states do not currently owe Paramount that amount. Paramount is asking the court to require financial security that could be used to cover certain losses if the company ultimately succeeds and establishes that the delay improperly caused those costs.

California Attorney General Rob Bonta disputes Paramount's effort to place that financial risk on the states. He argues Paramount and Warner Bros. Discovery voluntarily agreed to the ticking fee while knowing the transaction could face regulatory review and legal challenges.

The bond question has already surfaced in the case. When U.S. District Judge Araceli Martínez-Olguín granted the states a temporary restraining order in July, she waived the security requirement under Federal Rule of Civil Procedure 65(c), citing the public interest involved in the states' antitrust enforcement action.

Rule 65 generally allows courts issuing temporary restraining orders or preliminary injunctions to require the party seeking the order to provide security. The bond is meant to protect the restrained party against certain losses if the restriction is later found to have been improper. Judges have discretion over the amount and may waive the requirement, particularly in lawsuits brought by government agencies to enforce laws protecting the public.

Paramount's latest filing asks the court to revisit the financial consequences now that the merger is expected to remain on hold for months. The companies have agreed not to close until five days after a decision on the states' claims or June 1, 2027, whichever comes first.

The underlying lawsuit was brought under Section 7 of the Clayton Act, which allows courts to stop acquisitions when their likely effect may substantially lessen competition. The law does not require regulators to wait for competitive harm to occur before challenging a merger.

California and 11 other states claim combining Paramount and Warner Bros. Discovery would reduce competition in parts of the film and television business. Paramount denies the transaction violates antitrust law and argues the combination would strengthen its ability to compete.

The Justice Department has already cleared the acquisition, but federal approval does not prevent state attorneys general from bringing their own challenge under federal antitrust law. Paramount has also argued that continued delay could create additional regulatory costs because the Justice Department's clearance is set to expire February 19.

Martínez-Olguín has not yet ruled on Paramount's $1.88 billion bond request. The merger remains on hold, with trial scheduled to begin March 2, 2027.