Justice Department urges bond from states over Paramount-Warner merger challenge

The U.S. Justice Department on Tuesday asked a federal judge to compel a group of states, led by California, to post a $1.88 billion bond tied to their lawsuits against the $111 billion merger of Paramount and Warner Bros. Discovery. The department said the bond is needed to cover potential damages and to ensure the states have "skin in the game" if an injunction is issued.

Paramount has been pressing California Attorney General Rob Bonta for the bond, arguing that the delay in the merger is causing significant financial losses, including missed production investments and higher financing costs. A trial on the merger is set for March, well after the company’s target closing date of late September.

In its filing, the DOJ emphasized that, unlike the federal government and the Federal Trade Commission, state and private parties must post a bond when an injunction is sought. "Congress provided for complementary antitrust enforcement by the federal government and private parties — but made clear that it was not a system of equals," the department wrote.

The department also noted that its investigation, which examined more than 2 million documents and extensive data on streaming, linear TV, and film distribution, concluded the merger is unlikely to harm competition. It challenged the states’ claim that a bond can only be imposed after a finding that an injunction was improperly granted, arguing that such an interpretation would place states on the same footing as federal enforcers.

The bond request follows a legal dispute over whether an injunction was formally issued, as the studios voluntarily agreed to pause the deal under a joint stipulation. Paramount has described the states’ argument as misleading.

If the merger remains unclosed past Oct. 1, Warner Bros. Discovery shareholders could be owed roughly $650 million per quarter, or about $6.9 million per day, underscoring the financial stakes of the delay.