Millions of losses when the owner of TVN was taken over. Paramount wants financial guarantees
Paramount Skydance demands financial guarantees from the authors of the lawsuit blocking the takeover of Warner Bros. Discovery. This is explained by the costs associated with the delay.
A group of US states and the Writers Guild of America have filed lawsuits blocking the acquisition of Warner Bros. Discovery by Paramount Skydance. The former, led by California, argue that this is a threat to the film and television program distribution market. In turn, the WGA is concerned about limiting competition for screenwriters.
Acquisition of Warner Bros. Discovery by Paramount. There is an application for security
The lawsuits turned out to be a big problem for the company, which at the turn of July and August confirmed that it would not be able to complete the merger on the optimal date announced earlier, i.e. by the end of September. A federal court in California announced that the lawsuits will be heard jointly in March 2027.
Paramount Skydance emphasizes that the delay involves significant additional costs. Chief Financial Officer Dennis Cianelli mentioned the agreement under which, if the merger is not completed, the company will pay 25 cents per share, or USD 650 million, for each quarter from October this year. He also explained that the fee would only be necessary upon finalization of the takeover. The company wants to obtain funds for investors from the issue of new shares.
Delays in the merger of the giants also result in additional fees for the institutions that granted the bridge loan. The cost is USD 8-9 million per month and an additional fee for the commitment under the bridge loan, which will become due in June 2027. Cianelli estimated that the total amount would be approximately USD 190 million additionally if there are delays and the process extends beyond June.
Will Paramount Skydance lose $1.9 billion by taking over the owner of TVN?
For these reasons, Paramount Skydance asked the court to require the defendants to pay a financial security of $1.88 billion if their claims are dismissed by the court. The company claims that by the end of the process it will pay shareholders non-refundable USD 1.3 billion.
In its application, the giant refers to the Clayton Act, i.e. the provision of a guarantee that is intended to compensate Paramount for expected damage if the lawsuit turns out to be unjustified. This is about Paramount Skydance winning in court, which would show that the company was unfairly deprived of the opportunity to quickly merge with Warner Bros. Discovery.
Paramount’s lawyers emphasized that the suing states did not dispute the company’s expected financial harm. They were accused of ignoring this issue and reminded to obtain the required consent for the merger from institutions and bodies from 69 countries and economic and legal areas in which Warner Bros. operates. Discovery.
“If plaintiffs insist that this transaction be put on hold while the litigation continues, they must accept the financial consequences if their lawsuit is ultimately dismissed,” a Paramount Skydance spokesman said.
