Paramount Skydance on Tuesday reiterated its demand in a court filing that the 12 states and the WGA — whose antitrust lawsuits seek to block its takeover of Warner Bros. Discovery — post $1.88 billion in bond as security for the losses Paramount would incur if the deal doesn’t close until after the trial concludes next spring.
U.S. District Judge Araceli Martinez-Olguin, who is hearing the cases, has set a Sept. 24 hearing date to consider Paramount’s bond request.
Paramount filed its request for the states and the WGA to pony up the $1.88 billion bond on Aug. 17. In an Aug. 31 filing opposing the bond motion, the states — led by California Attorney General Rob Bonta — argued that Paramount’s potential financial losses are of its own making.
In their opposition reply, the states said that “Paramount now wishes to offload its responsibility” for agreeing to pay WBD shareholders a “ticking fee” of $7 million per day starting Oct. 1 until the deal clsoes. “But whatever regret Paramount may feel for its commitments to Warner Bros., to Plaintiff States, to the WGA, and to the Court, it cannot show that the Court acted ‘improvidently’ in signing the joint stipulation. Nor can Paramount show why the public or a nonprofit labor union should underwrite its acquisition of Warner Bros.”
But Paramount insists that the states and the WGA must “accept the financial consequences” if they lose in court.
“If plaintiffs insist that this transaction is paused during the pendency of their lawsuit, they must accept the financial consequences if their challenge ultimately fails,” a Paramount spokesperson said Tuesday. “Paramount agreed to delay closing to facilitate a prompt resolution of the case, while expressly preserving its legal rights and we continue to honour that agreement. We are not asking the district court to lift the no-close order, but to require enforcement of the bond that protects our financial interests while the litigation remains pending.”
Paramount argues in its filing that the Clayton Act and Rule 65 require plaintiffs to accept responsibility for the “substantial financial harm” incurred if their challenge ultimately fails. “Paramount agreed to delay closing to facilitate a prompt trial. It did not waive its right to the bond protection required while the transaction is paused,” the company said.
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“[A]t the eleventh hour, after dragging their investigations out for many months without providing feedback on any areas of competitive concern, and just days before final regulatory approvals from the European Commission were secured, plaintiff states filed suit seeking to stymie the transaction while immunising themselves from economic accountability if Paramount prevails,” the company said in its filing. “Paramount simply asks that Plaintiffs honour what the Clayton Act requires: A bond that will compensate Paramount for the damage it will suffer if the injunction proves improvidently granted, i.e., if Paramount ultimately prevails in the litigation and was therefore wrongly prevented from consummating the merger now, as it is prepared to do.”
Paramount argued that “the states never dispute that evidence or otherwise contest that Paramount will suffer financial injury as a result of the Order, both from the ticking fee and the incremental financing costs — a financial harm that the states outright ignore.” The filing is at this link.
Paramount said it “has satisfied all closing conditions under the merger agreement and received clearances from regulators representing 69 jurisdictions. These two lawsuits are the only remaining barrier to closing this transaction.”
From Variety US