Paramount finally is getting serious in its standoff with blue state attorneys general and the Writers Guild of America over the antitrust action aimed at shattering David Ellison‘s $111 billion deal to meld Warner Bros Discovery with the home of The Godfather.
In the deepest sense of an offer they can’t refuse, make that $1.88 billion serious.
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Following widely mocked leaked threats to leave California if there’s no significant settlement talks with the dug-in AGs and the scribes guild, Paramount’s legion of lawyers filed paperwork Monday seeking a $1.88 billion bond from the plaintiffs. If coughed up, the bond would help cover large swaths of the $7 million-a-day ticking fee Paramount Skydance is obliged to pay to WBD shareholders starting in a few weeks, plus other costs baked into the ParaBros agreement.
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“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,” a Paramount spokesperson told Deadline on Monday as the bond request was filed in federal court. “Here, every month of delay carries substantial and quantifiable financial consequences.”
With a March 2 trial start date on the books in front of an Oakland-based Judge Araceli Martínez-Olguín, Paramount could be in hock to the tune of around $1.3 billion once the parties face off.
To that, even as Martínez-Olguín has signaled then that she was not sympathetic to Paramount’s arguments of economic harm if the merger is blocked beyond September 30, Team Ellison offered its rational for the big ask today.
“Paramount is seeking a bond based on the straightforward calculation of the maximum potential ticking consideration and financing costs from this litigation,” the company spokesperson added. “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.”
That aside, a bond is meant to cover costs to the defendants in the course of the litigation and granting one is at the discretion of the judge in the case. In the AG’s case against Para-WBD, she explicitly waived that security requirement, because, she wrote in a ruling granting a temporary restraining order on closing the merger, “Plaintiffs have demonstrated that Plaintiff States bring suit to enforce important public interests.”
The big boy pants bond move also comes after weeks of Paramount self-sabotage with an ineffective Ellison NYT op-ed, self-interested executive elite endorsements, planted stories about Gavin Newsom‘s POV, plus vague promises of theatrical releases, deal concessions and settlement trial balloons.
Goading California’s Rob Bonta, New York’s Letitia James and other AGs with lists of the nearly 70 countries and jurisdictions like Donald Trump‘s DOJ, the UK, the E.U., Canada, and last week Mexico that have signed off on the merger, Paramount has found friends in Christopher Nolan’s DGA and Matt Loeb’s IATASE. In the transaction backed by Big Daddy and Oracle founder Larry Ellison, David Ellison and his execs have also found themselves at the receiving end of sharp rebukes from the WGA (who joined their own suit to the AGs’ one) and Hollywood’s powerful Teamsters’ local.
Putting some more real money on the table, PSKY shares are down 24% year to date as the merger stalls and the deal hasn’t closed. More anxiety is festers as the frozen situation leaves unanswered questions of layoffs and more for the $80 billion debt a combo ParaBros will carry if the two iconic companies even do become one.
Jill Goldsmith contributed to this report
Read the Paramount Skydance’s full statement on the $1.88 billion bond request here:
“Today, Paramount requested that the court enforce the statutory requirement that the plaintiffs post a bond in connection with their pending litigation, which blocks us from closing our merger with Warner Bros. Discovery. We have satisfied all closing conditions under our merger agreement, having received regulatory clearances from 68 jurisdictions. These two lawsuits are the only barrier to closing this transaction.
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.
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.
Against the overwhelming legal and regulatory consensus of independent competition authorities around the world representing 68 jurisdictions, California and the other 11 state attorneys general have chosen to erect a roadblock at the last second that harms two media companies whose combination would enable increased competition to benefit consumers, creators, and workers, while also strengthening Hollywood.
We remain confident that plaintiffs’ case is without merit and will defend our pro-competitive transaction in court. We look forward to closing this transaction and delivering its benefits to consumers and entertainment industry workers in California, the United States and around the world.”
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