The Department of Justice formally sided with Paramount’s demand that the states pay out its requested $1.88 billion bond to cover the mounting ticking fee in their delayed merger of Warner Bros. Discovery.
Trump’s DOJ filed a statement of interest on Tuesday responding to an antitrust lawsuit from 12 state attorneys general seeking to block the merger, in which they argued that a “proper bond” is required when states or private parties challenge a merger and an injunction is issued.
The regulator disagreed with the states’ argument that the bond is required only if a court determines that a preliminary injunction was “improvidently granted” and argued they have “no legitimate basis” not to post one.
“That reading, if followed, would have the effect of both nullifying the plain text of the statute (leading to separation-of-power concerns) and disregarding Congress’s enforcement scheme by elevating States to a status akin to the federal government,” the DOJ’s attorneys said.
It also emphasized that it already concluded in its own investigation that the merger was unlikely to undermine competition.
That investigation reviewed over two millions documents from over 80 parties as well as extensive data and advocacy from third parties across the media and entertainment ecosystem relating to streaming, linear TV and the production and distribution of films for theatrical release.
State AGs were able to participate in the DOJ’s investigation, which allowed them to share information with the agency and vice versa and related depositions.
The filing comes as the antitrust litigation between Paramount, the state AGs and the Writers’ Guild of America is headed to trial in March. David Ellison agreed to delay the closing until five days after the outcome of a trial, or June 1, 2027, whichever is earliest. The outside date for the merger to close is June 4, 2027.
Judge Araceli Martinez-Olguin said she would decide whether to impose a bond during a hearing on Sept. 24. Courts have typically avoided issuing massive bonds in merger cases. For example, the judge overseeing the Nexstar-Tegna merger granted a $10,000 bond instead of the companies’ request for $150 million in their ongoing legal battle with the state AGs.
Starting Oct. 1, Paramount is on the hook for a ticking fee of $7 million per day, or $650 million per quarter until the deal closes. If the deal does not close at all due to regulatory matters, It must pay WBD a $7 billion termination fee.
