Paramount Skydance seeks $1.88bn bond to offset costs of WBD merger delay

Paramount Skydance (PSKY) has urged the US District Court for the Northern District of California to enforce a bond to cover potential massive financial losses if its takeover of Warner Bros Discovery (WBD) is delayed or scuppered.

David Ellison

The reply briefs would require a US$1.88bn bond from a coalition of 12 state attorneys general and the Writers Guild of America (WGA), which filed a motion seeking a preliminary injunction against the merger in July.

Meanwhile, a coalition of 12 US states, led by California attorney general Rob Bonta, has obtained a temporary restraining order against the deal.

PSKY CEO David Ellison is reportedly already making plans to begin PSKY’s exit from California on October 1, the day the ‘ticking fee’ begins on its US$110bn WBD merger, unless talks have commenced with the coalition of 12 US states.

If the deal has not closed by September 30, PSKY has agreed to pay WBD shareholders an additional penalty fee of US$650m each quarter, the equivalent of around US$7m per day.

That would mean PSKY would be on the hook for more than US$1.3bn extra by the time the trial begins in March 2027, roughly four months later than PSKY had requested.

Following approval from the likes of the European Commission, these two lawsuits are the only remaining barrier to the transaction closing.

Paramount Skydance is now urging that the Clayton Act and Rule 65, which require plaintiffs to accept responsibility for substantial financial harm incurred if their challenge ultimately fails, be invoked.

“If plaintiffs insist that this transaction is paused during the pendency of their lawsuit, they must accept the financial consequences if their challenge ultimately fails,” a Paramount spokesperson said.

“Paramount agreed to delay closing to facilitate a prompt resolution of the case, while expressly preserving its legal rights, and we continue to honour that agreement. We are not asking the district court to lift the no-close order, but to require enforcement of the bond that protects our financial interests while the litigation remains pending.

“But for these lawsuits, the transaction is now otherwise ready to close, and the resulting costs of delay are substantial and quantifiable.

“The Clayton Act and Rule 65 provide for a bond precisely to protect against exactly those types of losses if a court determines an injunction ultimately is unwarranted. We are confident that the evidence will show that these lawsuits are meritless and look forward to closing the transaction and delivering its benefits in California, across the United States and around the world.”