Hollywood
Paramount faces pushback as California, WGA reject $1.88 billion bond request
States say Paramount’s merger delays are self-imposed as legal battle drags on
CALIFORNIA: Paramount’s big-screen ambitions have hit another legal plot twist. California, 11 other US states and the Writers Guild of America have urged a federal judge to reject Paramount Skydance’s request for a $1.88 billion bond linked to the delay in its proposed $110 billion acquisition of Warner Bros Discovery, according to a Reuters report.
California argued that the costs Paramount is seeking to cover are largely self-imposed and that the company should not shift the financial burden of the legal fight on to the public or the non-profit writers’ union.
At the centre of the dispute is a daily payment that could become increasingly expensive for Paramount. Under the merger agreement, the company will have to pay Warner Bros shareholders a $7 million fee for every day after September 30 that the transaction remains incomplete.
Paramount has argued that the legal challenge could leave it with substantial and unrecoverable costs. If the case runs through the scheduled March trial and final legal filings in April, the company estimates it could have paid about $1.3 billion in such fees.
The company has therefore asked the court to require the states and the Writers Guild to post a $1.88 billion bond. Paramount says the bond would protect it against losses if the plaintiffs ultimately lose their challenge.
California, however, says Paramount voluntarily agreed to the ticking fee as part of its effort to persuade Warner Bros to abandon an earlier agreement with Netflix. The company also agreed not to close the transaction until the states’ antitrust case is resolved, or until June 1, 2027, whichever comes first.
California attorney general Rob Bonta has argued that Paramount is now attempting to offload responsibility for costs arising from decisions it made itself.
The legal fight is part of a broader challenge to the proposed merger. California and the other states argue that combining Paramount and Warner Bros Discovery would create a media giant with greater power to raise prices across film and television.
The Writers Guild of America has separately challenged the transaction, raising concerns about its potential impact on competition and the wider entertainment industry.
Paramount, meanwhile, maintains that the plaintiffs should not be exempt from financial responsibility if their challenge ultimately fails. The company has argued that preventing the merger from closing while requiring Paramount to absorb all the costs of delay would be unfair.
The proposed deal would give Paramount a much larger film and television operation and help chief executive David Ellison position the company as a stronger rival to Netflix and Disney. But the antitrust lawsuits have emerged as the key obstacle to completing the transaction.
Paramount said regulatory authorities in at least 68 countries have either approved the deal or declined to challenge it, leaving the US lawsuits as the remaining major hurdle.
For now, the $110 billion Hollywood tie-up remains stuck between the courtroom and the balance sheet, with every day of delay potentially adding millions to the bill.
