WASHINGTON, Aug 17 (Reuters) - Paramount Skydance on Monday asked a U.S. judge to require a dozen states challenging its acquisition of Warner Bros Discovery to post a $1.88 billion bond to address the costs of delay in completing a tie-up.
The company must pay a fee of $7 million a day if the $110 billion merger does not close by September 30. Paramount noted the trial on the states legal challenge is scheduled for March and by the time it concludes and final legal briefs are submitted in April, it will have paid Warner Bros shareholders an unrecoverable $1.3 billion in "ticking fees."
Paramount also noted that the U.S. Justice Department's approval of the deal will expire on February 19. Paramount wants to require the posting of the bond so they can recover losses if a court approves the merger and said the states have “ample resources to post” even a large bond.
In addition to $1.7 billion in "ticking fees" through June 1, Paramount would incur $190 million in incremental financing costs by delaying the merger until June 2027. Paramount offered the fees in its pursuit of Warner Bros.
In late July, Paramount agreed to pause its acquisition of Warner Bros until after a ruling on a challenge by states to the deal
California and 11 states sued on July 13, arguing the deal would create a media behemoth with the power to raise prices in film and television. The Writers Guild of America has also sued to challenge the deal.
Similar merger challenges have taken an average of eight months for a judge to rule, a Reuters review of recent cases found.
The lawsuit, filed in Oakland federal court, threatens to derail Paramount CEO David Ellison's bid to transform his company into a major rival of Netflix and Disney.
Paramount said regulatory entities representing at least 68 countries have approved or declined to challenge the merger after reviewing it and the lawsuits are the only hurdle to the deal closing.
(Reporting by David Shepardson; Editing by Stephen Coates)
