LOS ANGELES — On Monday, California joined eleven other states and the Writers Guild of America in filing a brief urging a federal judge to reject Paramount Skydance’s request for a $1.88 billion bond. The bond is intended to cover damages the studio says it may incur from delays in completing its $110 billion acquisition of Warner Bros. Discovery.
State officials say the damages are self‑inflicted
California Attorney General Rob Bonta argued that the alleged damages are the result of Paramount’s own contractual choices. The studio voluntarily offered Warner Bros. shareholders a daily “ticking fee” if the merger does not close on time, a provision designed to pressure the parties to finalize the deal.
“Paramount now wishes to offload its responsibility,” Bonta wrote in the filing. “The request for a bond should be denied because the alleged losses are self‑imposed.”
Bond request tied to daily penalty fees
Under the merger agreement, Paramount must pay a $7 million fee each day the transaction remains incomplete after September 30. If the merger fails to close by that date, the daily penalty could quickly total billions of dollars.
Paramount has also agreed to pause the closing of the deal until the antitrust case is resolved, or until June 1, 2027, whichever comes first. The company estimates that by the time the trial concludes and final briefs are filed in April, it will have already paid Warner Bros. shareholders roughly $1.3 billion in unrecoverable fees.
Legal challenge scheduled for March
The states’ legal challenge will be heard in March. If the court denies the bond, Paramount would have to rely on its own cash reserves or other financing to cover any potential daily penalties.
Critics of the bond argue that it would effectively shift the financial risk of a private corporate dispute onto taxpayers, a point echoed by the coalition of states and the Writers Guild.
Broader implications for Hollywood mergers
The dispute highlights the growing tension between large media conglomerates and state regulators who are increasingly scrutinizing the public‑policy impacts of mega‑mergers. While the Trump administration has generally favored deregulation, state attorneys general continue to assert their authority to protect local economies and taxpayers from what they view as corporate overreach.
For California and its partner states, the fight is not just about a single bond request; it is about setting a precedent that large, financially complex deals should not be able to impose hidden costs on the public.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
