On October 1, Paramount Skydance starts paying Warner Bros. Discovery's shareholders $0.00277778 a share for every day it has not finished buying them. The number is in the merger agreement, capped at 25 cents a share per ninety days and handed over when the deal finally closes. Paramount's own estimate of the cash value is about $650 million a quarter. On Thursday, three days before that meter starts, the company launched syndication of a $7.5 billion secured term loan and said it intends to raise roughly $44.4 billion more in secured debt beyond that and everything already arranged.
Put the two numbers next to each other and the fee stops looking like a penalty. Six hundred fifty million a quarter, against the $80.9 billion of equity Paramount agreed to pay, works out at about eight tenths of one percent every ninety days — roughly 3.2 percent a year. The ten-year Treasury yield closed Thursday at 5.225 percent, its highest since 2007. So Warner's shareholders are waiting on $31 a share while being compensated at well under what the same money would earn sitting in government bonds. Whatever the ticking fee is, it is not interest.
It was never designed as a price, which explains the gap. Paramount added the clause in February, while its offer still stood at $30 a share and the trigger date was the end of December, and said in writing that it was there to underscore confidence in the speed and certainty of its regulatory path. It was a statement of how fast the company expected to move, converted into cash for anyone who doubted it. The bid then went to $31, the trigger moved forward three months to September 30, and Paramount separately agreed to fund the $2.8 billion Warner owed Netflix for walking away from that deal.
And the delay it is charging for is not one Paramount can shorten by writing cheques. Its own quarterly filing says the closing was postponed because of a lawsuit, with both sides agreeing to wait until five days after the court rules or June 1, 2027, whichever arrives first. The merger agreement itself runs to March 4, 2027, with a single automatic extension to June. Monday's settlement with California, eleven other states and the Writers Guild removed the last domestic obstacle, which is why the loan came to market three days later. A clause that penalises slowness is running against a docket.
Everything else about this deal is enormous and expensive. Eighteen lenders hold what remains of a bridge facility that has been cut from $54 billion to $49 billion as permanent financing replaced it. The Ellison parties are putting in $46.7 billion of equity. The term loan launched Thursday is $7.5 billion of it, and there is $44.4 billion of secured borrowing still to arrange.
Against all of that, the clock that starts on Thursday is the cheapest money in the transaction.
Whatever the ticking fee is, it is not interest.
