Paramount seeks $1.88 billion bond as California AG rejects request to revise merger delay agreement

The California attorney general’s office rejected Paramount Pictures’ request for a $1.88 billion bond intended to cover potential “ticking” fees linked to the delayed Warner Bros. merger. The AG’s office said Paramount, a sophisticated company, entered the merger agreement knowing it would face antitrust review and should not shift the financial burden to the state.

"Bottom line: 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 office said.

Attorney General Rob Bonta leads a 12-state coalition challenging the merger on competition grounds in theatrical and basic-cable markets. Paramount had previously agreed to postpone closing the deal until after a trial scheduled for March 2 or until June of the following year, whichever comes first. The company now argues that a later trial date could force it to pay $1.7 billion in daily fees to Warner Bros. shareholders, plus $190 million in financing costs.

Paramount contends that the states and the Writers Guild of America, which has its own antitrust suit, should post a bond to cover those potential losses if the merger ultimately proceeds. Judge Araceli Martinez-Olguin had earlier issued a restraining order blocking the merger without requiring a bond, citing the states’ public-interest objectives.

"Paramount and Warner Bros. are two sophisticated companies who willfully decided to include a costly ticking fee as a provision in their merger contract. They knew this merger would undergo regulatory review; they knew it was not a done deal; and they chose to include it anyway," the AG’s office added.

Paramount responded that the 12 states are opposing a global consensus that the transaction poses no competitive harm and reiterated confidence that the plaintiffs’ case lacks merit.

"We remain confident that plaintiffs’ case is without merit and will defend our pro-competitive transaction in court," the company said.