David Ellison wants those challenging his Warner Bros. Discovery deal — including California and 11 other states — to be prepared to pay nearly $1.9 billion if they lose their lawsuit.
Paramount Skydance’s $110 billion WBD acquisition is on pause after lawsuits from 12 states and the Writers Guild of America, which argued the deal is anticompetitive. A federal judge said the plaintiffs “raised serious questions” in their lawsuit and set a trial date for early March.
Ellison’s company now wants the judge to order its legal opponents to post a $1.88 billion bond that Paramount would receive if it eventually prevails in court.
Paramount has agreed to pay WBD shareholders a “ticking fee” of nearly $7 million per day that its deal isn’t closed, starting October 1. By the time the trial concludes, Paramount would owe $1.3 billion in ticking fees that would be “unrecoverable,” the company said on Monday, adding that it’s also missing out on “significant additional cost savings” by not closing the WBD deal now.
“Paramount went into this process with eyes wide open,” a spokesperson for California Attorney General Rob Bonta’s office said. “They are lying in a bed of their own making.”
Corey Martin, an M&A lawyer who’s head of the entertainment finance practice at Los Angeles-based firm Granderson Des Rochers, said it was “very unlikely” that Paramount would convince the judge that the plaintiffs should be on the hook for the ticking fees.
The judge can decide whether the plaintiffs need to post a bond and, if so, in what amount.
“I would be surprised if they could apply the proceeds of any bond toward the ticking fee,” Martin said.
When Nexstar was hit with an antitrust case after buying rival Tegna, the TV station giant asked the court to require the plaintiffs to post a $150 million bond. The judge required only a $10,000 bond.
Paramount has already secured approval from every other relevant regulatory authority, including the US Department of Justice and the European Commission.
