The California Attorney General’s office has firmly rejected Paramount’s request for a substantial $1.88 billion bond, asserting that the company is attempting to rewrite its agreement regarding the delay of the Warner Bros. merger. This merger is currently scheduled for review in an antitrust trial next March.
California’s Strong Response
In its statement, the Attorney General’s office criticized Paramount as a “sophisticated” entity that willingly entered into the merger with the understanding that it would be subject to regulatory scrutiny. They contended that California should not be held responsible for the financial consequences stemming from Paramount’s own decisions, particularly the stipulation of a $7 million-per-day “ticking fee” to Warner Bros. shareholders.
“Bottom line: Paramount went into this process with eyes wide open,” the office remarked. “They are lying in a bed of their own making, and once again, trying to blackmail us to get us to back down.”
Context of the Merger Dispute
California Attorney General Rob Bonta is spearheading a coalition of 12 states aiming to block the merger, citing concerns over diminished competition in theatrical and basic cable markets. Last month, Paramount agreed to postpone the merger closure until after the legal proceedings are resolved, or by June at the latest.
However, Paramount is pushing for an expedited trial date, ideally in November. In its recent motion, the company claimed that it faces potential costs exceeding $1.7 billion in ticking fees and an additional $190 million in financing if the case extends until June 1.
Paramount’s Legal Strategy
Paramount is now contending that both the states involved and the Writers Guild of America, which has filed its own antitrust suit, should be obligated to post a bond to offset its losses should the merger ultimately receive approval. Judge Araceli Martinez-Olguin had previously granted a 14-day restraining order against the merger in July, waiving the bond requirement by acknowledging the states’ pursuit of significant public interests.
Afterward, the states, the WGA, and Paramount reached an agreement to delay the merger—akin to a preliminary injunction—that notably excluded any bond obligations. With the trial now slated for March 2, Paramount is seeking to modify this agreement to include the requested bond. Should this request fail, Paramount aims to dissolve the agreement altogether and move forward with the merger.
Paramount’s Position and Future Outlook
The Attorney General’s office emphasized the notion that both Paramount and Warner Bros. are well-equipped to handle the complexities associated with their merger contract, which includes the costly ticking fee. “What’s more, Paramount itself stipulated to the timing it is now protesting,” stated the A.G.’s office. “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.”
In response, Paramount maintained its confidence, arguing that the 12 states are contradicting a prevailing consensus that the merger poses no competitive risks and should therefore be approved. “We remain confident that plaintiffs’ case is without merit and will defend our pro-competitive transaction in court,” the company stated on Monday.
