Just weeks before Paramount Skydance starts being on the hook for the vaunted $7-million-a-day ticking fee to Warner Bros Discovery shareholders, the David Ellison-run company today pushed hard once again for the Writers Guild of America, California and 11 other states to pony up a nearly $2 billion bond in the antitrust battle over the $111 billion ParaBros merger.
In fact, with an implication they might just close the currently paused deal anyway if a federal judge doesn’t see things their way, Paramount pushed very hard Tuesday.
“Ticking fees like the one Paramount faces are extraordinarily rare, in part because they are extraordinarily expensive,” the multiple law firm-repped Paramount said Tuesday in a tense reply brief over the contested bond and the long wait until the March trial start. “It would be incredibly risky to add such fees solely to deter private litigation; if the merging parties ultimately lose the antitrust litigation, the payor of the ticking fee would be left with an enormous bill and no merger,” the company added.
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“And there is no contention that this is such a case,” Paramount’s lawyers went on to say. “Here, Paramount added the ticking fee in a highly competitive bidding war with Netflix, confident that its transaction is legal under established U.S. and foreign antitrust laws and would clear the relevant regulatory hurdles well before those fees started accruing,” they noted of the roller coaster ride to snag WBD from the streamer and the ultimate deal that was given the thumbs up by “good friend” Donald Trump‘s Department of Justice earlier this summer.
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Insisting on the importance of more than 60 other jurisdictions that have approved the merger — though the vast majorities of those approvals were limited to the immediate territory of the specific nations — Paramount don’t quite come out and call the states, the scribes and their long-threatened July 13 lawsuit out as dirty dealers, but they get damn close.
“Paramount provided unrebutted evidence that, but for the Order, it may suffer $1.88 billion in damages,” the 22-page filing says with telling mentions of the halted Nexstar/Tegna merger throughout. “Critically, the states never dispute that evidence or otherwise contest that Paramount will suffer financial injury as a result of the Order, both from the ticking fee and the incremental financing costs—a financial harm that the states outright ignore. Nor do they deny that Paramount would close this transaction by September 30, 2026, but-for the stipulated injunction. For purposes of this motion, then, the states have conceded that Paramount provided evidence to establish $1.88 billion in potential damages.”
Take a deep breath and look at that September 30 mention — that could be the vanishing point here, if you know what I mean. Also, recall that Paramount and Warner Bros agreed two weeks after the AGs and WGA hit them in court not to seal the merger deal until June 1, 2027, or when the legal challenges end, whichever comes first.
Shifting focus again, the filing states, full stop: “Because Paramount has established $1.88 billion in damages it will potentially suffer as a direct result of being wrongfully enjoined, the Court should grant the motion.”
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Lamenting Ellison’s “old stale promise” of putting out more movies, California Attorney General Rob Bonta wants structural remedies in the ParaBros merger in order to back off. Whatever has been floated behind closed boardroom doors (which has not included peeling off CNN as of yet), it hasn’t gotten structural enough for the AG, who is seeking re-election.
As of Tuesday, with no real settlement talks underway, U.S. District Judge Araceli Martinez-Olguin has a September 24 hearing on the books to discuss the bond issue. Also on the non-court calendar is the October 1 date when the more than $635 million-a-quarter ticking fees begins. FYI: That is the same date that Paramount supposedly has given for settlement talks to begin or they might start looking at a corporate move out of blue state California to a red state.
Now facing a move from Iowa and Montana to take the whole dispute to the Supreme Court, Bonta and crew already have called the Paramount relocation whispers “blackmail.” A much-hyped settlement sit-down was scuttled at the eleventh hour by the Meta- and Nexstar/Tegna-fighting Golden State AG amid accusations that Paramount was leaking details of confidential discussions. An allegation that Paramount denies.
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Battle lines and alliances clearly are drawn with everyone from Tom Cruise to California’s current and next governor, the Christopher Nolan-run DGA, IATSE, Ari Emanuel and seemingly everyone in between offering encouragement for a putting down of swords and a settlement. On the other hand, as big names link arms with Block the Merger activists, another report submitted to the L.A. Board of Supervisors warns of possible big job losses for the region if the deal goes through. The Department of Economic Opportunity adds to the gloom and doom by predicting that the mega-merger could cost L.A. County billions in wages and hundreds of millions in tax revenue.
With all that as the backdrop, Paramount said Tuesday in a separate statement that “if plaintiffs insist that this transaction is paused during the pendency of their lawsuit, they must accept the financial consequences if their challenge ultimately fails.” The company added: “Paramount agreed to delay closing to facilitate a prompt resolution of the case, while expressly preserving its legal rights and we continue to honor that agreement. We are not asking the district court to lift the no-close order, but to require enforcement of the bond that protects our financial interests while the litigation remains pending.”
AG Bonta’s office response to Tuesday’s Paramount brief was brief unto itself. “We believe Paramount’s motion has no merit and look forward to presenting our case in court at the September 24th hearing” the state DOJ asserted.
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Having come up short weeks ago in its efforts to gain a faster trial in the challenge from the Bonta-led coalition of state attorneys general and the scribes’ union, Paramount moved on August 17 for its merger opponents to hand over some cash. Cash that is designed for the multi-billion dollar company and its loaded owner(s) to cover the “extraordinary losses” the long wait until a judgement is given on ParaBros Yes or ParaBros No.
“Now that trial is scheduled for March 2027, roughly four months after the trial date proposed by Defendants, and more than half a year from now, Paramount seeks the bond to which it is statutorily entitled,” the formerly Shari Redstone-owned company wrote in its motion last month
Needless to say AG Bonta, New York AG Letitia James, the WGA and the rest of the roadblockers took a very different stance.
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“Whatever regret Paramount may feel for its commitments to Warner Bros., to Plaintiff States, to the WGA,1 and to the Court, it cannot show that the Court acted ‘improvidently’ in signing the joint stipulation,” the WGA and the 12 AGs responded on September 1. “Nor can Paramount show why the public or a non-profit labor union should underwrite its acquisition of Warner Bros.”
“In the alternative, if the Court grants Paramount’s motion, it should impose a nominal bond of $10,000.”
That would be a joke, if anyone was still laughing in this bitter standoff.
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