Deadline reported rising tensions in the legal battle between Paramount Skydance and coalition of 12 states and the Writers Guild of America. Paramount has asked the plaintiffs to post a $ $1.88 billion bond. Paramount owes shareholders a ticking fee of seven million dollars a day if the case is not settled before October 1st. The bond would be intended to cover those costs. CEO David Ellison has threatened to leave California if the case isn’t settled before the fees kick in.
Paramount originally asked for a November trial and was stifled when the judge set the trial date for March 2027. At that point, Paramount will owe $1.3 Billion in fees at the beginning of the trial. The motion filed for the bond by Paramount attorneys reads, “Now that trial is scheduled for March 2027, roughly four months after the trial date proposed by Defendants, and more than half year from now, Paramount seeks the bond to which it is statutorily entitled. 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,” per Deadline.
According to Deadline, the motion continues to speak on accumulating legal costs faced by the company: “By the time trial concludes and the parties submit their final briefs, Paramount will have paid Warner Bros. shareholders an unrecoverable $1.3 billion in ticking fees alone. Delay also threatens to nullify the regulatory approvals that Defendants have already spent months securing. If the transaction remains unclosed by the end of trial, Defendants will have to take additional steps to obtain regulatory approval, once again at substantial expense. Absent security, even a complete victory on the merits would not restore a dollar of those extraordinary losses.”
Paramount even went as far as to cite the laws which the case was based on, “Both the Clayton Act, the federal antitrust law upon which these suits are based, and other federal law expressly provide that plaintiffs are required to post a bond covering the potential harm from halting a transaction to litigate, so that if they lose, the injured party has a source of recovery for the damage caused. Here, every month of delay carries substantial and quantifiable financial consequences,” via Deadline.
Judge Araceli Martínez-Olguín has indicated that she does not agree with Paramount on the basis of financial harm. Paramount responded by indicating their reason for the figures: “Paramount is seeking a bond based on the straightforward calculation of the maximum potential ticking consideration and financing costs from this litigation. But these are not the only costs of delay. By virtue of what will be at least an eight-month delay in closing, there will be no integration and no ramped-up investment in content, production and creative talent by the combined company. Of course, in addition, employees of both Paramount and WBD are also harmed by the uncertainties caused by the delay,” according to Deadline.
The bond remains at the judge’s discretion. In this case, she has already waived the security requirement because “Plaintiffs have demonstrated that Plaintiff States bring suit to enforce important public interests,” per Deadline.
California AG Rob Bonta, the de facto leader of the coalition, gave his thoughts on Paramount’s most recent request: “Paramount and Warner Bros. are two sophisticated companies who willfully decided to include a costly ticking fee as a provision in their merger contract. They knew this merger would undergo regulatory review; they knew it was not a done deal; and they chose to include it anyway,” he said per Deadline.
Bonta continued, “What’s more, Paramount itself stipulated to the timing it is now protesting — they agreed to the dates and did not request a bond as a condition of agreeing not to close until after the trial, and potentially as late as June 2027. Now, they’re trying to get a do-over. Bottom line: 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,” according to Deadline.
Ellison has not done himself many favors regarding this case. He recently wrote an op-ed in The New York Times in which he stated that the case was about the acquisition of CNN instead of antitrust infringement. According to mxdwn, Ellison recently took over CBS News and immediately placed the controversial Bari Weiss in charge as editor-in-chief. Their tenure at the head of the company has seen several controversies, particularly involving one of their flagship programs, 60 Minutes.