Paramount wants a $1.9 billion bond from state AGs fighting the Warner Bros. merger

By Brian Stelter, CNN

(CNN) — Paramount wants the states that are suing over the Warner Bros. Discovery deal to post a $1.9 billion bond.

The states are scoffing at the idea. “They don’t have any legitimate claim. I mean, honestly, this reeks of desperation,” California attorney general Rob Bonta told CNN in response.

Paramount made the request in a court motion on Monday, asserting that “this is a textbook case for requiring bond.”

It remains to be seen if the judge overseeing the case, Araceli Martinez-Olguín, will agree, but there is reason to be skeptical.

Such bonds are up to the judge, and earlier in the case Martinez-Olguín waived the bond requirement because, she wrote, the states had demonstrated that they were bringing the suit “to enforce important public interests.”

The argument in Monday’s motion revolves around the “ticking fees” that make the acquisition of WBD, CNN’s parent, more costly for Paramount starting in October. The fees are a part of the merger agreement that the companies signed last winter. The agreement remains in place until June 2027.

“Each day that passes after September 30th without the merger closing, Paramount must pay roughly $7 million in ‘ticking fees’ to Warner Bros. stockholders and yet more fees to its financing sources for maintaining their commitments,” the motion states.

An antitrust trial is slated for March. By the time the judge rules, Paramount “will have incurred $1.3 billion in unrecoverable financial losses” from the fees, the motion states.

And so the company says the states and the other plaintiff, the Writers’ Guild of America, should be on the hook. If Paramount prevails in court, it would be paid the bond, thereby compensating for the ticking fees and other costs.

A spokesperson for Bonta’s office responded by saying, “Paramount went into this process with eyes wide open. They are lying in a bed of their own making, and once again, trying to blackmail us to get us to back down.”

The coalition of 12 state attorneys general that sued to block the deal last month notched an early win when Martinez-Olguín issued a temporary restraining order. At that time, she declined to require a bond.

Paramount and the plaintiffs then agreed to skip a preliminary injunction hearing and move straight toward trial, despite the likelihood that the “ticking fees” would start to add up.

Antitrust experts have asserted that Paramount is trying to pressure the states into a pre-trial settlement. Some have also suggested that the company is laying the legal groundwork for a fast-track appeals process.

“Regardless of when the judicial process concludes, Paramount is certain to suffer serious financial loss,” the motion states.

In an interview with CNN’s Jim Sciutto on “The Brief,” Bonta pointed out that Paramount agreed to the “ticking fee” terms while knowing that “regulators were still looking at this deal, including us.”

“Now,” Bonta said, “they’re trying to put the California taxpayers on the hook.”

He said he expects the judge will reject the bond request “because there’s no basis for it.”

Sciutto asked about the possibility that Paramount is setting up an appeal that could reach all the way to the Supreme Court.

Bonta said he doesn’t know if Paramount has a long-term plan like that, but “I respectfully suggest that they focus on the antitrust case in front of them that we set forth in our complaint, because that’s all this is about.”

Paramount executives and allies have repeatedly charged that the state AG case is really about politics, but Bonta and others have rejected that assertion, saying they are merely seeking to enforce antitrust law.

Bonta said Monday, “We’re confident with the law and the facts in our case.”

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