SACRAMENTO - California Attorney General Rob Bonta has formally rejected the $1.88 billion bond Paramount Pictures posted as part of its ongoing merger proceedings, a move that escalates a bitter legal standoff between the studio and state regulators over the timing of the deal’s completion.
In a filing submitted to the California Superior Court on Monday, Bonta’s office argued that Paramount’s bond, designed to cover potential losses while the merger faces a court-ordered delay, was improperly structured and effectively amounts to the company requesting a “do-over” on its obligation to close the transaction promptly. The rejection marks the latest twist in a merger saga that has dragged on for months, with the state accusing the studio of trying to sidestep regulatory oversight.
At the heart of the dispute is Paramount’s proposed $8 billion merger with Skydance Media, a deal that was originally slated to close earlier this year but has been stalled by a California judge’s injunction issued in June. That injunction, requested by Bonta’s office, paused the merger pending a full review of whether the transaction violates state antitrust laws and unfairly disadvantages smaller competitors in the streaming and theatrical distribution markets. Paramount, eager to finalize the deal, sought to post a bond as a financial guarantee that it could compensate parties if the merger’s delay causes harm, a standard legal maneuver designed to allow a company to proceed despite an injunction.
However, Bonta’s office contends that Paramount’s bond submission, which was accompanied by a request to lift the injunction, is insufficient. The attorney general’s filing characterizes the studio’s move as a thinly veiled attempt to reset the legal clock, arguing that the bond amount - while large on its face - does not account for the full scope of potential damages that could accrue if the merger is ultimately approved but the delay causes irreversible market shifts. The filing further alleges that Paramount is seeking to “sidestep the court’s original order” by treating the bond as a transactional formality rather than a genuine remedy.
“The bond is not a blank check for the company to ignore the judicial process,” the filing states, according to court records reviewed by USA Film News. “Paramount appears to believe it can buy its way out of a stay order by simply writing a larger check, but the law requires a substantive review of the underlying merits, not a financial workaround.”
A spokesperson for Paramount declined to comment on the rejection, but sources close to the studio indicate that the company is preparing to file a revised bond proposal within the next two weeks, potentially increasing the amount or restructuring the terms to address Bonta’s concerns. The sources, who spoke on condition of anonymity because the negotiations are confidential, added that Paramount remains confident the merger will close before the end of the year, regardless of the legal hurdles.
The bond rejection is the second major setback for Paramount this month. On August 3, a state appeals court denied the studio’s motion to expedite an evidentiary hearing on the antitrust claims, a ruling that pushed the earliest possible trial date to late October. Bonta’s office has argued that a full trial is necessary to examine whether the merger would consolidate too much control over film distribution, particularly among independent theaters and emerging streaming platforms. Paramount, by contrast, has maintained that the merger is a traditional consolidation that will bring much-needed capital to a struggling studio, pointing to its recent slate of box-office successes as evidence of its viability.
Industry analysts note that the bond rejection could have broader implications beyond this single deal. If Bonta’s position prevails, it could set a precedent for how California regulators treat bond postings in large media mergers, forcing companies to more thoroughly justify their timelines and financial remedies before courts allow them to proceed. “This is unusual,” said one media law professor who asked not to be named. “Bonds are typically rubber-stamped. The attorney general’s insistence on reviewing the substance suggests a more aggressive regulatory posture toward entertainment consolidation.”
The merger, announced in April, combines Paramount’s film and television assets with Skydance’s production slate, which includes major franchises like “Mission: Impossible” and “Top Gun.” The deal has faced scrutiny from multiple fronts, including the Federal Communications Commission, which is separately reviewing broadcast license transfers. Bonta’s rejection, however, is the most direct legal challenge to date, and the state’s court filings signal that it intends to fight the timeline aggressively.
Paramount’s next legal move is expected to be a motion for reconsideration, filed with the same court, which could include a revised bond that addresses Bonta’s specific objections. The studio has also hinted that it may seek to move the case to federal court, arguing that interstate commerce issues warrant a different jurisdiction. Legal experts are divided on whether that gambit would succeed, given the state’s clear interest in regulating corporate conduct within its borders.
For now, the merger remains in limbo, with Paramount’s stock trading down 2% in midday trading following news of the rejection. The studio’s leadership, including CEO Brian Robbins, has privately expressed frustration with what they view as regulatory overreach, but publicly the company has stressed its commitment to “working collaboratively with all parties.” In a statement released Tuesday, Paramount said it “remains confident in the legal merits of our transaction and will continue to pursue the appropriate remedies.”
The next hearing is scheduled for September 12, where both parties will argue over the sufficiency of any revised bond. Until then, the fate of a merger that would reshape Hollywood’s landscape hangs on a financial document that the state says simply doesn’t measure up.
Source: Variety