Paramount seeks 1.9 million bond from foes

David Ellison’s company is seeking a $1.9 billion bond from legal foes challenging its Warner Bros. Discovery deal, including California and 11 other states. The $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 it would receive if it eventually prevails in court.

The company 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, it would owe $1.3 billion in ticking fees that would be unrecoverable, the company said on Monday.

They are also missing out on significant additional cost savings by not closing the WBD deal now. A spokesperson for California Attorney General Rob Bonta’s office said, “They went into this process with eyes wide open, they are lying in a bed of their own making.”

Corey Martin, an M&A lawyer and head of the entertainment finance practice at Los Angeles-based firm Granderson Des Rochers, said it was very unlikely that they 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.

Martin added, “I would be surprised if they could apply the proceeds of any bond toward the ticking fee.” 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.

The company has already secured approval from every other relevant regulatory authority, including the US Department of Justice and the European Commission. It is now waiting for the court’s decision on the bond request.

The trial is set to conclude in early March.