New Delhi, Aug. 18 -- Paramount Skydance is demanding that California and other US states, suing to block its merger with Warner Bros., put up $1.9 billion to cover fees the company will incur if the deal is delayed, according to a lawsuit filed Monday.

The company is supposed to pay a $7 million daily fee if the $110 billion merger does not close by September 30. Paramount noted that the trial of the state's legal challenge is scheduled for March, and by the time it concludes and final legal briefs are submitted in April, it will have paid Warner Bros. shareholders an unrecoverable $1.3 billion in "ticking fees."

The audacious bid is the latest step in a growing fight between the media giant and a group of liberal states, which says ta...