California hits back at Paramount’s $1.9bn bond demand

California has hit back at a Paramount legal request for a $1.88bn bond from the Writers Guild of America (WGA) and the 12 US states ahead of its antitrust trial in March.

Paramount wants the US states and WGA to post the bond in advance of the court case into the proposed merger with Warner Bros Discovery (WBD). It would cover its losses should the case be dismissed.

In a filing with a California district court on Monday morning, Ellison’s lawyers argued that the plaintiffs pay the bond by 30 September to cover financial harm caused by the delay in closing the deal.

However, California’s attorney general’s office said that Paramount was trying to “blackmail” the state, adding that the studio knew that a delay was likely. 

“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,” a statement read.

“What’s more, Paramount itself stipulated to the timing it is now protesting - they agreed to the dates and did not request a bond as a condition of agreeing not to close until after the trial, and potentially as late as June 2027. Now, they’re trying to get a do-over.”

The state added: ”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.”

Paramount is pushing for an earlier court date in large part because it faces a $7m daily “ticking fee” that kicks in for each day the merger has not closed after 30 September. That would hit around $1.7bn by March in addition to almost $200m of financing costs.

Eager to consummate the merger and avoid massive fees, Ellison has pushed California attorney general Rob Bonta to engage in settlement negotiations and threatened to relocate Paramount outside California. Bonta, who is running for re-election in November, said the move was attempted blackmail.