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.

The media company made the request in a 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.

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.

The office of California Attorney General Rob Bonta, who is leading the coalition, responded in a statement Monday afternoon by pointing out that Paramount agreed to the “ticking fee” terms while knowing “this merger would undergo regulatory review.”

“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,” a spokesperson said.

“Paramount went into this process with eyes wide open,” the spokesperson added. “They are lying in a bed of their own making, and once again, trying to blackmail us to get us to back down.”

Bonta has previously dismissed the idea that taxpayers “would pay for what Paramount agreed to pay.”

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