By Dawn Chmielewski
LOS ANGELES, Aug 31 (Reuters) – The State of California and 11 other states joined the Writers Guild of America on Monday in urging a federal court judge to deny Paramount Skydance’s request for a $1.88 billion bond to address the cost of delay in completing its acquisition of Warner Bros Discovery.
California argued that any damages Paramount has incurred from delays in closing the Warner Bros deal are self-imposed, and that the court should reject any effort to shift the burden to the public and a non-profit union, a court filing on Monday showed.
The state argued Paramount willingly offered to pay Warner Bros shareholders a “ticking fee” for every day, starting on October 1, that it takes to close the transaction. The fee was offered as an incentive to persuade Warner Bros to abandon its earlier deal with Netflix.
Paramount also voluntarily agreed to refrain from closing the merger until the antitrust case, which the states filed on July 13 to block the deal, is resolved, or June 1, 2027, whichever comes first, the state argued.
“Paramount now wishes to offload its responsibility,” California Attorney General Rob Bonta argued in the court filing, saying Paramount’s request for a bond should be denied.
The company must pay a fee of $7 million a day if the $110 billion merger does not close by September 30. Paramount noted the trial on the states’ legal challenge is scheduled for March and by the time it concludes and final legal briefs are submitted in April, it will have paid Warner Bros shareholders an unrecoverable $1.3 billion.
Paramount said in a statement that the states “should not get a free pass” from requirements that they post a bond against the harms caused “if their challenge ultimately fails.”
“Plaintiffs cannot have it both ways: they cannot seek the extraordinary remedy of preventing Paramount from closing the transaction while insisting they bear no responsibility for the enormous costs a delayed trial and injunction will cause if their case fails,” Paramount said. “The bond requirement exists precisely to protect against that result.”
California and the other 11 states argue the combination of Paramount and Warner Bros would create a media behemoth with the power to raise prices in film and television. The Writers Guild of America has also sued to challenge the deal.
The lawsuit, filed in Oakland federal court, threatens to derail Paramount CEO David Ellison’s bid to transform his company into a major rival of Netflix and Disney.
Paramount said regulatory entities representing at least 68 countries have approved or declined to challenge the merger after reviewing it and the lawsuits are the only hurdle to the deal closing.
The studio said the lawsuit is “meritless,” and that it looks forward to completing the transaction.
(Editing by Muralikumar Anantharaman)
Comments