Paramount Skydance CFO Dennis Cinelli outlined how the studio will pay the more than $1 billion it is set to pay to shareholders and financiers as its planned acquisition of Warner Bros. Discovery has been delayed to at least June 2027 to allow for a trial against 12 state attorneys general seeking to block the merger to take place next March.
In the company’s latest earnings call on Tuesday, Cinelli noted that with the delay, Paramount Skydance is set to pay $190 million in bridge fees, comprised of a monthly fee of $8-9 million for each month the deal isn’t closed, combined with a bridge commitment fee due in June 2027.
The studio is also required to pay a 25-cent-per-share ticking fee to WBD shareholders if and when the deal closes, amounting to $650 million per quarter for every quarter the deal doesn’t close after Sept. 30. With the merger trial set to take place between March 2-19, TheWrap estimates that the ticking fee payment will reach a minimum of $1.2 billion should the merger be closed.
“In terms of the question on our current liquidity and balance sheet, we ended the quarter at $1.6 billion in cash and $3.2 billion of undrawn revolver capacity. This is sufficient to fund the business by dividend transaction-related costs through the extended timeline,” Cinelli said.
“We took off our free cash flow guidance 10% before transmission costs. So we feel good about where we stand in terms of liquidity and managing for this big spend time period,” he added.
If the attorneys general, led by California AG Rob Bonta, are successful at next year’s trial and block the merger, Paramount will instead be required to pay a $7 billion termination fee to Warner Bros. Discovery.
In their lawsuit, the state AGs argue that the merger will reduce competition in the basic cable and theatrical markets to unlawful levels, with the Writers Guild of America claiming in its own lawsuit that the merger will result in fewer films and TV shows being produced and fewer employment opportunities for writers, citing the decrease in films produced by the former 20th Century Fox since its 2019 acquisition by Disney as one of its examples.
The start date for the trial, set by U.S. District Judge Araceli Martinez-Olguin, leans closer to the April 2027 start date requested by the AGs, while Paramount had requested a November 2026 start date.
Ellison, who has repeatedly pledged that Paramount Skydance will release 30 films per year after the Warner merger is completed, expressed confidence during the earnings call that his company will get a favorable ruling at the trial.
“We’re absolutely open to finding a solution out of court, but we also really believe that we’ll win at trial,” Ellison said. “We believe that the facts and the law are on our side, and the trial date was just [set] for March of next year. And as it relates to the financing, all that is in place, there’s nothing at risk, and so we’re confident we’ll close the transaction, and we’re working towards that as fast as we possibly can.”