Justice Department Sides With Paramount on Demand That States Post $1.88 Billion Bond
The government is urging a federal judge to force a dozen states led by California to bear the costs of the hold-up caused by their lawsuits challenging the $111 billion megamerger of Paramount and Warner Bros. Discovery.
In a statement of interest filed on Tuesday, the Justice Department argues that the states must post a “proper bond” taking into consideration potential damages.
“The bond requirement forces parties to have skin in the game,” the motion states.
The move follows Paramount last week continuing to press California Attorney General Rob Bonta for a $1.88 billion bond to cover losses if it wins the cases over the deal, which has been temporarily halted. A trial has been scheduled for March, months past CEO David Ellison’s target closing date of late September.
There will be major financial repercussions for the delay. Under the agreement, Warners shareholders are owed roughly $650 million per quarter or $6.9 million per day if the merger hasn’t closed by Oct. 1. The bond represents the maximum payout to investors, plus legal fees.
The states and WGA have pushed back on the demand, arguing that Paramount proposed the fee in a bid to win support from shareholders, who were weighing a rival bid from Netflix at the time. The studio “now wishes to offload that responsibility,” stated a filing from California Attorney General Rob Bonta last month.
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