Paramount Skydance petitioned the court on Aug. 17 to order states to post a $1.88 billion bond to cover costs from potential merger delays caused by their lawsuit seeking to block the merger with Warner Bros.
The motion also asked the judge to consider abandoning her order to stop the merger if the plaintiffs, which include 12 states and labor union Writers Guild of America West, can’t post the bond by Sept. 30.
Paramount’s deal to buy Warner Bros. includes paying fees if the $111 billion merger isn’t closed by the end of September. But the trial for the antitrust lawsuit, led by California Attorney General Rob Bonta, is not scheduled until March 2.
The company urged the court to set an earlier trial date but was denied.
“Each day that passes after September 30th without the merger closing, Paramount must pay roughly $7 million in ‘ticking fees’ to Warner Bros. Stockholders and yet more fees to its financing sources for maintaining their commitments, and it is forestalled from realizing technology and marketing synergies, among many other transaction benefits,” Paramount said in the motion.
By the time the trial ends, Paramount estimates it will have paid Warner Bros. Shareholders an unrecoverable $1.3 billion in ticking fees.
The delay also threatens to nullify the regulatory approvals already secured by Paramount, the company said.
Requiring a bond is allowed by federal law to ensure defendants have an opportunity to recover damages caused by a wrongful injunction, Paramount said in the court motion.
The merger has been approved by 68 antitrust regulators around the world.
“Despite that resounding worldwide regulatory consensus, California and a handful of other states seek to halt the merger,” Paramount said in the court filing. “They do so not as regulators wielding their authority to exercise antitrust review, but as [guardians] ostensibly on behalf of the very citizens who stand to benefit from the ‘increased competition across the media and entertainment ecosystem’ that the merger will create.”
Beyond the mounting costs, Hollywood’s industry workers are concerned a merger delay could do further damage to the state’s local productions. Paramount indicated to shareholders they might leave California if the trial continues to be delayed until March.
Settlement Declined
Two of Hollywood’s biggest unions—the Directors Guild of America and International Alliance of Theatrical Stage Employees—on Aug. 12 urged Paramount’s CEO David Ellison and California’s attorney general to settle litigation over the merger before it harmed thousands of industry workers.
California Attorney General Rob Bonta attends a press conference in Los Angeles, Calif., on April 15, 2024. (John Fredricks/The Epoch Times)
The California Department of Justice said it planned to move ahead with its antitrust lawsuit despite the unions’ request.
A department spokesperson questioned the timing of Paramount’s request for a bond in the case Aug. 17. “Paramount and Warner Bros. are two sophisticated companies who willfully decided to include a costly ticking fee as a provision in their merger contract,” the spokesperson told The Epoch Times in an email.
They accused Paramount of going into the process with their “eyes wide open,” while trying now to “blackmail us to get us to back down.”
