The results of a court hearing in Oakland on Wednesday might be a little to close for comfort for Paramount and David Ellison. Additionally, the findings of a report submitted to the Los Angeles County Board of Supervisors might prove very scary in terms of potential job losses and more if the $111 billion merger with Warner Bros Discovery goes through.
As fellow billionaire Mark Zuckerberg’s Meta faces 29 states down the street in California court over potentially trillions in penalties and allegations that his social media platforms violated child privacy laws and are constructed to be addictive, lawyers for CEO Ellison were in federal court Monday. in hopes to get their recent $1.88 billion bond request addressed ASAP.
With a trial in the 12-state antitrust case against the melding Paramount and Warner Bros Discovery already set for March 2027, it all turned out to be a session of hurry up and wait.
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Judge Araceli Martinez-Olguin decided this morning that nothing is going to happen in that big flex by Paramount until September 24.
That’s just days before the $7 million a day ticking fee to WBD shareholders kicks in on October 1. A stipulation of the agreement from earlier this year between Team Ellison and the David Zaslav-run WBD that could rack up close to $1.3 billion in payouts (if the deal goes south or is pushed back) for the still Melrose lot based company. Fees that, along with some regulatory hoops Paramount will have to rejump through in February, that make up a significant portion of Para’s request August 17 motion for the big money to offset the “extraordinary losses” the state’s July 13 filed case could cause the company.
There’s also a June 4 deadline for the expiration of a deal, with Paramount obliged to pay a $7 billion termination fee. Not cheap, even for the scion of one time world’s richest man Larry Ellison (who has committed some very big bucks to guaranteing the debt heavy WBD deal).
The Oracle founder was nowhere to be seen or heard today, but plaintiffs’ lead attorney California’s Ashley Kaplan, plus fellow lawyers James Weingarten, Bren Nakamura, Richard Parker, Kellie Lerner, Julia May, Nicole Gordon, Divya Rao, Joseph Alioto, and Christina Black were onboard virtually for CA AG Rob Bonta, NY AG Letitia James, 10 other blue states and the Writers Guild of America in the hearing. Beth Wilkinson (maybe the busiest lawyer in Tinseltown this summer), Rakesh Kilaru, Jeffrey Kessler, Marguerite Sullivan, Dan Petrocelli, Pete Herrick, Julia Schiller, Maggie Sullivan and Jennifer Parsigian were there for Paramount and WBD.
The bond may be a long overdue grown up move by Paramount in the bitter battle in court and the court of public opinion. However, it could also ultimately prove an empty gesture too. In a TRO ruling last month, the Joe Biden-appointed judge cast aside the need for a bond, $1.88 billion or otherwise. “Plaintiffs have demonstrated that Plaintiff States bring suit to enforce important public interests,” she said in a pretty heavily implied rejection of the security requirement.
Still, courts like casinos are full of wild card moments, so that could all shift by late September, or not.
With all that playing out in Northern California, the L.A. County Department of Economic Opportunity to today built on its already ominous June 18 report to the board of supervisors with even harsher data.
If the $82 billion debt carrying ParaBros was to be real, David Ellison’s dream will be a nightmare for Paramount and WBD staff, the “Assessing the Effects of the Proposed Paramount Skydance Acquisition of Warner Bros. Discovery on the Los Angeles County Economy and Workforce” entitled dense document predicts.
There will be “a potential loss of 15,567 corporate roles that overlap across both companies, with 6,099 shared, and 2,495 jobs specifically in Los Angeles County,” today’s report says.
Getting very specific in the realm of some of the worst fears of both critics and boasters of the merger, the DEO document goes on to cite:
* If the merger goes through, about 4,500 film and TV jobs in Los Angeles County could be lost
over the three-year period when the companies combine operations* In total, 10,360 job years could be at risk, including:
o 2,661 indirect jobs at small businesses that support production — such as prop houses,
printers, transportation companies, and other vendors.
o 3,204 induced jobs that exist because film and TV workers spend money in the local
economy — including restaurants, retailers, and service providers.*The economic impact of losing these jobs is significant. At stake:
o $1.26 billion in wages
o $2.78 billion in economic value
o $4.06 billion in total business output
o $547 million in tax revenue, including $78.6 million in local taxes — most of which (63%)
comes from property taxes.
With initial details from two months ago in mind, the report notes:
These estimates measure employment capacity at risk, not a forecast of layoffs. One job
sustained for one year equals one job-year, so the impact may be distributed across different
workers, projects, and positions over the three-year integration period.
- The impact extends beyond direct film and television employment. An estimated 2,661 indirect
job-years are at risk among businesses that support production, including independent artists,
agents and promoters, sound recording, employment services, and equipment rental. A further
3,204 induced job-years reflect reduced household spending across the County economy. - The economic impact extends well beyond employment. The modeled losses correspond to
approximately $1.26 billion in labor income, $2.79 billion in value added, and $4.06 billion in
economic output over the modeled period. - The fiscal impact extends across federal, state, and local government. The modeled losses
correspond to approximately $547 million in tax revenue, including $78.6 million in local tax
revenue. - Impacts would emerge over time, not at closing. Evidence from six completed media mergers
shows workforce actions unfolding over several years following a transaction, supporting
continued monitoring of employment and production activity rather than a single point-in-time - assessment.
To put this into perspective, the direct jobs at risk account for nearly 9% of the 52,016 film and TV
jobs California has already lost since 2022 — and almost all those losses (99.6%) occurred in Los
Angeles County.
Do the math, all of it.
Paramount had their own POV on the DEO report
“LA County’s own economic report underscores what we have been saying all along: our industry is in decline, production is down and jobs are being lost — and lost for good if we don’t act,” a company spokesperson told Deadline Wednesday. “Our plan to invest $30 billion annually in production and release at least 30 films a year is how we regain that ground: more production that supports more jobs over time, and ultimately, a stronger, more durable entertainment industry for generations to come.”
Meanwhile, back in Oakland, as various exhibitors, guilds and pundits opine on the pros and cons of one big ParaBros, and Team Ellison leaks threats to jump state to a friendly Red jurisdiction, today’s 21-minute case management conference before Martinez-Olguin had some other topics on the agenda too.
For one thing, all sides said in an August 13 filing they “are having constructive discussions regarding the identification of two alternative magistrate judges to preside over a settlement conference for the Actions and will provide a further update to the Court as soon as possible.” Now, this is standard operating procedure in matters such as this, and leans not much at all to the desires of the DGA, the suddenly corporately compliant IATSE and others for a deal to avoid a trial. To that, Magistrate Judge Ajay Krishnan, who took on his role in January,has been named to oversee discovery.
No judge has been picked “for mediation,” but filings (AKA suggestions) from the AGs/WGA and Para/WBD are due on August 26.
Neither Paramount nor Golden State AG Bonta’s office responded to Deadline’s request for comment on today’s hearing.
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Paramount shares closed down a hair Wednesday at $10.60, off more than 20% year to date (despite gaining over the past few weeks) and half of where they were trading at their 52-week high of over $20.
Overall, the $31-a-share cash deal is funded by mix of equity and debt. Larry Ellison is personally guaranteeing $45.7 billion in equity commitments (with much of that syndicated out to Middle East investors); the debt package of about $49 billion is run through a group of banks led by Citibank, Bank of America and Apollo. Para would assume WBD’s debt, reported at about $30 billion net as of June 30.
Jill Goldsmith contributed to this report
