Paramount seeks $1.88 billion bond from states challenging WBD merger, citing mounting delay costs

Paramount Skydance on Monday escalated its legal fight to complete the $110 billion acquisition of Warner Bros. Discovery, asking a federal judge to force the 12 states challenging the deal to post a $1.88 billion bond to cover the mounting costs of a court-ordered delay.

The bond request, filed in Oakland federal court before U.S. District Judge Araceli Martínez-Olguín, aims to recover what Paramount called “extraordinary losses” from a ticking-fee provision that kicks in Oct. 1. Under the merger agreement, Paramount must pay WBD shareholders $7 million per day, or about $650 million per quarter, until the deal closes.

“By the time trial concludes and the parties submit their final briefs, Paramount will have paid Warner Bros. shareholders an unrecoverable $1.3 billion in ticking fees alone,” Paramount said in the filing. “Absent security, even a complete victory on the merits would not restore a dollar of those extraordinary losses.”

The trial is scheduled to begin March 2, 2027, and last 12 days. Final briefs are expected in April, according to the company. Beyond ticking fees, Paramount warned it faces $190 million in incremental financing costs if the merger is delayed until June 2027, as the current timeline allows. The U.S. Department of Justice’s approval of the deal expires Feb. 19, heightening the risk that regulatory clearances already secured could lapse.

California Attorney General Rob Bonta and 11 other states filed suit on July 13, arguing the merger would violate the Clayton Antitrust Act by consolidating major streaming platforms, studios, and broadcast news assets under one entity, reducing competition and harming creative workers. The Writers Guild of America has also sued to block the transaction.

In a sharply worded response, a spokesperson for Bonta’s office accused Paramount of trying to “blackmail” the states.

“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,” the unsigned statement said. The office noted that Paramount itself stipulated to the trial timeline and “did not request a bond as a condition of agreeing not to close until after the trial.”

Paramount argued that federal law requires plaintiffs who obtain preliminary relief — in this case, the court-ordered pause of the merger — to post security covering the harm caused by the delay. The company noted that regulatory entities in at least 68 countries have either approved the deal or declined to challenge it, and that the DOJ’s Antitrust Division gave its approval. The states’ lawsuit “is the only hurdle to the deal closing,” Paramount said.

The bond request faces an uphill legal battle. Corey Martin, an M&A lawyer and head of the entertainment finance practice at Granderson Des Rochers, told Business Insider that it was “very unlikely” the judge would require the states to cover ticking fees. He cited a recent case where TV station giant Nexstar requested a $150 million bond from antitrust plaintiffs after buying rival Tegna; the judge instead required only a $10,000 bond.

Judge Martínez-Olguín will decide whether to order a bond and in what amount. Paramount set the $1.88 billion figure as a “straightforward calculation of the maximum potential ticking consideration and financing costs from this litigation,” according to a company spokesperson.

Beyond financial penalties, Paramount warned that the delay prevents the combined company from integrating operations, investing in content, and benefiting from cost savings. “Employees of both Paramount and WBD are also harmed by the uncertainties caused by the delay,” the company said.

The lawsuit threatens to derail CEO David Ellison’s bid to transform Paramount into a major rival of Netflix and Disney. Last week, Ellison and Paramount Chief Legal Officer Makan Delrahim appeared at a political conference in Sacramento alongside Bonta, who said he was confident the states would prevail and that Paramount was “eager” to settle. California Governor Gavin Newsom has reportedly urged both sides to reach an out-of-court agreement.

The 12 states suing are California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.