PSKY Seeks $1.88B Bond From State AGs

Paramount Skydance asked a U.S. judge Monday to require a dozen states challenging its $110 billion acquisition of Warner Bros. Discovery to post a $1.88 billion bond covering the costs of any delay in completing the deal.

The company faces a $7 million daily fee if the merger does not close by September 30. 

With the states’ trial scheduled for March and final briefs due in April, Paramount said it would by then have paid Warner Bros. shareholders an unrecoverable $1.3 billion in “ticking fees.”

California and 11 other states sued on July 13, arguing the combination would create a media giant with the power to raise prices for film and television. The Writers Guild of America has also filed a challenge. Paramount said regulators in at least 68 countries have already approved the deal or declined to oppose it, leaving the state lawsuits as the sole remaining obstacle.

California Attorney General Rob Bonta rejected the bond request, saying Paramount and Warner Bros. “are two sophisticated companies who willfully decided to include a costly ticking fee as a provision in their merger contract.” He added that Paramount earlier agreed to the very timing it now protests: “Now, they’re trying to get a do-over. Paramount went into this process with eyes wide open. They are lying in a bed of their own making, and once again, trying to blackmail us to get us to back down.”

A Reuters review of recent cases found that similar merger challenges have taken an average of eight months for a judge to rule. The Oakland federal court lawsuit threatens to derail Paramount CEO David Ellison’s effort to turn the company into a major rival of Netflix and Disney.