A group of 12 state attorneys general and the Writers Guild of America are asking Judge Araceli Martinez-Olguin to deny Paramount’s request that they post a $1.9 billion bond to cover the company’s ticking fees and other financing costs associated with its pending Warner Bros. Discovery merger.
Under the terms of the merger, Paramount will start paying the 25 cent per share ticking fee on Oct. 1, which translates to a payout of $650 million per quarter or $7 million per day until closing. By the time the trial begins in March, the company will be on the hook for over $1 billion in ticking fees.
Additionally, the company is on the hook to pay WBD a $7 billion termination fee if the deal does not close at all due to regulatory matters. The outside date to complete the $110 billion deal is June 4, 2027.
In a filing on Monday, the states and WGA argued that Paramount “now wishes to offload its responsibility” after imposing the ticking and break-up fees on themselves and voluntarily agreeing to delay the closing of the merger until after the outcome of a trial, or June 1, 2027.
The group also says that no bond is required after Martinez-Olguin determined that their lawsuit was brought to “enforce important public interests” when she granted a temporary restraining order. Additionally, they argue that the David Ellison-led media giant “cannot show any change in circumstances justifying a material modification in terms.”
“Paramount waited twenty-four days to ask this Court to rewrite the stipulation it had just signed. Paramount conducted no intervening discovery. Paramount seeks not to dissolve the stipulation, but to expand it to include new, onerous terms that were never agreed upon by Plaintiffs or ordered by the Court,” the group’s lawyers wrote. “No court in this case has made a final merits determination on the lawfulness of Paramount’s proposed merger. Paramount must demonstrate a significant change, and it cannot.”
The state AGs and WGA warn that granting Paramount’s request would allow it to “unfairly renege on its commitments without the required showing” and incentivize other merging parties to “negotiate extraordinary fees to inoculate themselves from state and private antitrust enforcement.”
“The Court should deny Paramount’s motion and decline to modify the stipulation to require a bond,” the filing concludes. “In the alternative, if the Court grants Paramount’s motion, it should impose a nominal bond of $10,000.”
A Paramount spokesperson told TheWrap that plaintiffs seeking to block a transaction are required to post a bond to “protect against the harm caused if their challenge ultimately fails” under the Clayton Act.
They argued that the state AGs and WGA should “not get a free pass from that requirement simply by invoking the public interest given their vision of the public interest is contrary to the view of regulators around the world who have cleared this transaction.”
“Plaintiffs cannot have it both ways: they cannot seek the extraordinary remedy of preventing Paramount from closing the transaction while insisting they bear no responsibility for the enormous costs a delayed trial and injunction will cause if their case fails,” they added. “The bond requirement exists precisely to protect against that result.”
Paramount also said it remains confident that the evidence will demonstrate that the lawsuit is “meritless.”
“We look forward to closing the transaction and delivering its benefits to consumers and entertainment industry workers in California, across the United States, and around the world,” the statement concluded.
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