The California attorney general’s office fired back against Paramount’s request for a $1.88 billion bond on Monday, saying the company is seeking a “do-over” on its agreement to delay the Warner Bros. merger until an antitrust trial next March.
In a statement, the A.G.’s office argued that Paramount is a “sophisticated” company that knew it would face regulatory review when it agreed to pay Warner Bros. shareholders a $7 million-per-day ticking fee, and that California should not be made to bear the burden of that decision.
“Bottom line: Paramount went into this process with eyes wide open,” the office said. “They are lying in a bed of their own making, and once again, trying to blackmail us to get us to back down.”
California Attorney General Rob Bonta is leading a 12-state coalition to block the merger on the grounds that it will reduce competition in the theatrical and basic cable markets. Last month, Paramount agreed to hold off on closing the deal until after the case is resolved at trial, or until next June, whichever comes first.
But Paramount was hoping for an earlier trial date — ideally in November. In a motion filed on Monday, the company argued that it will be forced to pay $1.7 billion in ticking fees to Warner Bros. shareholders if the case drags out until June 1, plus another $190 million in financing costs.
Paramount argues that the states and the Writers Guild of America — which has filed its own antitrust suit — should be required to post a bond to cover its losses arising from the delay in the event that the deal is ultimately approved.
Judge Araceli Martinez-Olguin initially granted a 14-day restraining order to block the merger in July. In that order, she waived the requirement to post a bond, saying the states had shown they were acting in pursuit of “important public interests.”
The states, the WGA and Paramount later entered a stipulation to delay the merger — the functional equivalent of a preliminary injunction — which did not include any bond requirement. Now that Martinez-Olguin has set the trial for March 2, Paramount is seeking to amend the agreement to include the $1.88 billion bond. Failing that, Paramount wants to dissolve the deal and allow the merger to close.
“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,” the A.G.’s office said Monday. “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.”
In a statement on Monday, Paramount argued that the 12 states are defying a global consensus that the deal presents no issues of competitive harm and should be approved.
“We remain confident that plaintiffs’ case is without merit and will defend our pro-competitive transaction in court,” the company said.
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