Paramount Skydance is demanding that the states suing to block its $111 billion deal for Warner Bros. Discovery post a nearly $1.9 billion bond ($1,884,726,092, to be precise about it), pending the outcome of the litigation.
In a statement Monday, the company, led by CEO David Ellison, says that the bond demand is based on settled federal law.
“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,” the company said in a statement. “Here, every month of delay carries substantial and quantifiable financial consequences.”
Paramount counts Makan Delrahim, previously the chief antitrust enforcer in the U.S. during the first Trump administration, as its head of legal affairs. So how did the company come to the $1.9 billion ask?
“Paramount is seeking a bond based on the straightforward calculation of the maximum potential ticking consideration and financing costs from this litigation,” the company states. “Butthese 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.”
The company also notes that, as of Friday, all global regulators have signed off on the deal, including the U.S. DOJ, leaving the state lawsuit as the last hurdle to clear, thus reinforcing why the states should be on the hook for the bond.
“It bears emphasis that the pursuit of this lawsuit by the State Plaintiffs has created a substantial delay in closing although all regulators who have analyzed the deal have cleared it,” the filing states. “The State Plaintiffs have maintained that they cannot prepare for a trial any sooner than next spring, even though such a prolonged schedule between the time of the complaint and trial is unusually long for merger litigation of this nature — to say nothing of the fact that state attorneys general had more than six months to investigate the transaction prior to filing the complaint, and so were not starting from scratch. Given that Plaintiffs insist upon this delay while standing as the lone parties around the world objecting to the transaction, a bond is required to protect Paramount against the financial harm wrought by the circumstances.”
Paramount has been playing a hardball public pressure campaign since the lawsuit was filed, with threats to leave the state of California (realistic or not), as well as accusations that partisan politics are at play. Hollywood is divided on whether the states and company should try and settle or follow through with the trial, further complicating the effort.
But the bond is a tangible ask, one that would put taxpayers on the hook in a high-profile case.
In response, California Attorney General Rob Bonta equated the bond demand to “blackmail,” stating that Paramount is “lying in a bed of their own making.”
“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,” Bonta said in a statement. “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 trail, 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,” he said.