California, Writers Guild Push Back on Paramount’s $1.9 Billion Bond Request
Synopsis
California and the Writers Guild ask a federal court to deny Paramount’s bond request, arguing the delay costs in its Warner Bros deal are self-imposed.
Key Highlights
- 12 states, including Calif. urge federal judge to deny Paramount’s bid for $1.88B bond
- Paramount wants the bond to compensate for withholding costs on its $110 billion complete acquisition agreement for Warner Bros Discovery.
- California says the delay costs are self-harm and cannot be shifted to taxpayers or a nonprofit union.
- The Writers Guild of America similarly has also filed to oppose the merger.
The State of California and 11 other states have joined the Writers Guild of America on Monday to oppose Paramount Skydance’s move for a $1.88 billion bond by a federal court judge. It was simply a bond obligating payment for the time lost in completing Paramount’s purchase of Warner Bros Discovery.
California argued in a court filing that any damages Paramount has incurred from the delays are self-inflicted and that the court should not impose those costs on the public or a non-profit union.
Paramount’s Own Commitments Cited
State officials say Paramount had agreed to pay shareholders of Warner Bros a “ticking fee” for every day beyond October 1 in closing the deal. It was paid as an incentive to persuade Warner Bros. not to renew its then-existing deal with Netflix.
The state said Paramount also voluntarily committed to not closing the merger until the state’s antitrust case, which they filed on July 13, has been resolved, or June 1, 2027 approaches. In its filing, filed Tuesday, California Attorney General Rob Bonta argued that Paramount is trying to shift responsibilities it had already agreed to take on and said the studio’s request for bond should be denied.
Daily Fees and Trial Timeline
Warner Bros is suing Paramount for $110 billion if it does not complete its merger with the studio by September 30, making Paramount liable to pay Warner Bros $7 million a day. The company said the trial over the states’ lawsuit is set to begin in March and by the time it ends, and final legal briefs are filed in April, Paramount will have paid Warner Bros shareholders an irrecoverable value of $1.3 billion.
Paramount’s Response
Paramount said in a statement that the states “should not get a free pass” on bond requirements to ensure damages if their legal challenge ultimately fails. It told the court that the states cannot try to both prevent the deal from closing, while avoiding responsibility for delaying a trial and injunction should their case fail. “The bond requirement exists specifically to guard against that outcome,” the studio explained.
Broader Antitrust Concerns
The 12 states, led by California, have argued that a merged Paramount and Warner Bros would become a media behemoth which could raise prices for film and television. The deal has also been challenged by the Writers Guild of America (WGA), which has filed a separate lawsuit.
A case filed in federal court in Oakland, Calif., could also set back Paramount CEO David Ellison’s plans to develop the company into a serious rival to Netflix and Disney.
Paramount stated regulators in 68countries had either cleared the merger or opted not to challenge it following a review and that ongoing lawsuits remain the final hurdle for closing. The lawsuit was described as “meritless” by the company, which also stated that it looks forward to completing the transaction.
Source: Reuters
At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
You Might Also Like
Harnessing the Power of Upselling and Cross-Selling in E-Commerce
First Refunds of Trump Tariffs to Start May 12
