Paramount wants the states that are suing over the Warner Bros. Discovery deal to post a $1.9 billion bond.
The states are scoffing at the idea. “They don’t have any legitimate claim. I mean, honestly, this reeks of desperation,” California Attorney General Rob Bonta told CNN in response.
Paramount made the request in a court motion on Monday, asserting that “this is a textbook case for requiring bond.”
It remains to be seen if the judge overseeing the case, Araceli Martinez-Olguín, will agree, but there is reason to be skeptical. Such bonds are up to the judge, and earlier in the case Martinez-Olguín waived the bond requirement because, she wrote, the states had demonstrated that they were bringing the suit “to enforce important public interests.”
The Ticking Fees
The argument in Monday’s motion revolves around the “ticking fees” that make the acquisition of Warner Bros. Discovery more costly for Paramount starting in October. The fees are a part of the merger agreement that the companies signed last winter. The agreement remains in place until June 2027.
“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,” the motion states.
An antitrust trial is slated for March. By the time the judge rules, Paramount “will have incurred $1.3 billion in unrecoverable financial losses” from the fees, the motion states.
The States’ Response
A spokesperson for Bonta’s office responded: “Paramount went into this process with eyes wide open. They are lying in a bed of their own making, and once again, trying to blackmail us to get us to back down.”
The coalition of 12 state attorneys general that sued to block the deal last month notched an early win when Martinez-Olguín issued a temporary restraining order. At that time, she declined to require a bond.
Paramount and the plaintiffs then agreed to skip a preliminary injunction hearing and move straight toward trial, despite the likelihood that the “ticking fees” would start to add up.
The Strategy
Antitrust experts have asserted that Paramount is trying to pressure the states into a pre-trial settlement. Some have also suggested that the company is laying the legal groundwork for a fast-track appeals process.
“Regardless of when the judicial process concludes, Paramount is certain to suffer serious financial loss,” the motion states.
In an interview with CNN, Bonta pointed out that Paramount agreed to the “ticking fee” terms while knowing that “regulators were still looking at this deal, including us.” “Now,” Bonta said, “they’re trying to put the California taxpayers on the hook.”
The Bottom Line
Paramount is asking state attorneys general to post a $1.9 billion bond in the antitrust case challenging its merger with Warner Bros. Discovery. The company argues it will face $7 million in daily “ticking fees” starting October 1. California’s AG called the request “desperation.” A judge previously waived the bond requirement, ruling that the states are enforcing important public interests. Antitrust experts say Paramount may be pressuring the states to settle or laying groundwork for an appeal.
