Paramount lawyers have filed a legal request that the 12 US state attorneys general and Writers Guild of America (WGA) pay a $1.88bn bond in connection with their antitrust case against the media company’s proposed merger with Warner Bros Discovery (WBD).
Last week David Ellison’s company said it had cleared regulatory hurdles around the world and was confident the $111bn transaction “could and would close today […] but for the actions of just 12 state attorneys general”.
In a filing with a California district court on Monday morning, Ellison’s lawyers argued that the plaintiffs pay the bond by September 30 to cover financial harm caused by the delay in closing the deal.
Noting the March 2 2027 trial start date scheduled by a US judge earlier this month, Monday’s filing cited the cumulative cost of a $7m daily “ticking fee” that kicks in for each day the merger has not closed after September 30, as well as other factors.
The filing read, “By the time trial concludes and the parties submit their final briefs, Paramount will have paid Warner Bros. shareholders an unrecoverable $1.3 billion in ticking fees alone.”
It continued, ”Delay also threatens to nullify the regulatory approvals that Defendants have already spent months securing. If the transaction remains unclosed by the end of trial, Defendants will have to take additional steps to obtain regulatory approval, once again at substantial expense. Absent security, even a complete victory on the merits would not restore a dollar of those extraordinary losses.”
Paramount lawyers said while they initially agreed to a “no-close” court order without a bond, they were now pursuing the bond within their statutory rights.
A Paramount spokesperson said, “Both the Clayton Act, the federal antitrust law upon which these suits are based, and other federal law expressly provide that plaintiffs are required to post a bond covering the potential harm from halting a transaction to litigate, so that if they lose, the injured party has a source of recovery for the damage caused. Here, every month of delay carries substantial and quantifiable financial consequences.”
The plaintiffs in the two consolidated cases have argued a merger is harmful to competition, while Paramount has insisted the opposite and said it will win the case on its merits. Eager to consummate the merger and avoid massive fees, Ellison has pushed California attorney general Rob Bonta to engage in settlement negotiations and threatened to relocate Paramount outside California. Bonta, who is running for re-election in November, said the move was attempted blackmail.
The full Paramount statement appears below.
“Today, Paramount requested that the court enforce the statutory requirement that the plaintiffs post a bond in connection with their pending litigation, which blocks us from closing our merger with Warner Bros. Discovery. We have satisfied all closing conditions under our merger agreement, having received regulatory clearances from 68 jurisdictions. These two lawsuits are the only barrier to closing this transaction.
Both the Clayton Act, the federal antitrust law upon which these suits are based, and other federal law expressly provide that plaintiffs are required to post a bond covering the potential harm from halting a transaction to litigate, so that if they lose, the injured party has a source of recovery for the damage caused. Here, every month of delay carries substantial and quantifiable financial consequences.
Paramount is seeking a bond based on the straightforward calculation of the maximum potential ticking consideration and financing costs from this litigation. But these are not the only costs of delay. By virtue of what will be at least an eight-month delay in closing, there will be no integration and no ramped-up investment in content, production, and creative talent by the combined company. Of course, in addition, employees of both Paramount and WBD are also harmed by the uncertainties caused by the delay.
Against the overwhelming legal and regulatory consensus of independent competition authorities around the world representing 68 jurisdictions, California and the other 11 state attorneys general have chosen to erect a roadblock at the last second that harms two media companies whose combination would enable increased competition to benefit consumers, creators, and workers, while also strengthening Hollywood.
We remain confident that plaintiffs’ case is without merit and will defend our pro-competitive transaction in court. We look forward to closing this transaction and delivering its benefits to consumers and entertainment industry workers in California, the United States and around the world.”
