Paramount Demands $1.9bn Guarantee From States Over Warner Bros Merger Lawsuit

Paramount Skydance has asked California and 11 other US states challenging its proposed merger with Warner Bros. to provide a $1.9 billion financial guarantee to cover potential costs the company could incur if the legal action delays the deal.

The demand was contained in a lawsuit filed on Monday as opposition to the proposed merger continues to grow across the US entertainment industry.

Paramount Seeks Protection From Delay Costs

Paramount, led by David Ellison, said it could face significant financial losses if the ongoing lawsuit prevents the $110 billion deal from being completed on schedule.

Under the agreement, Warner Bros. shareholders would receive a $7 million daily “ticking fee” if the transaction is not completed by October 1.

Paramount is therefore asking the court to require California and the other states challenging the merger, alongside the Writers Guild of America, to provide the $1.9 billion surety.

If the court grants the request and the states ultimately lose their case, the money could be used to cover the costs Paramount says it incurred as a result of the litigation.

A hearing on the request is scheduled for Wednesday.

States Oppose The Mega Merger

The proposed takeover has triggered strong opposition from California and other states, as well as groups within Hollywood.

Critics argue that combining Paramount and Warner Bros. could reduce competition in the entertainment industry, lead to job losses and result in fewer films being produced.

There are also concerns among media organisations over the future independence of CNN, which is among the major assets involved in the proposed transaction.

Paramount has pushed back against the opposition and has sought to protect the deal from what it considers unnecessary delays.

Tensions Between Paramount And California

The dispute has also escalated between Paramount and California Attorney General Rob Bonta.

Ellison recently threatened to move the company out of California if Bonta did not negotiate over the state’s lawsuit challenging the merger.

Bonta rejected the move, describing the threat as “blackmail.”

Despite the opposition from several US states, the proposed takeover has already received approval from the US federal government, the European Union and the British government.

The legal battle could now determine whether Paramount’s ambitious plan to take control of Warner Bros. and its major entertainment assets proceeds as planned.