The US Justice Department is urging a federal judge to order the states and trade union challenging Paramount Skydance Corp.’s $110 billion takeover of Warner Bros. Discovery Inc. to post a bond to cover any potential late fees that result from their lawsuit.
Paramount wants the states — led by California — and the Writers Guild of America to post a nearly $1.9 billion bond pending the outcome of their twin lawsuits, which are currently set for trial in March. The DOJ didn’t take a position on the size of the bond, but said federal law requires the states and the guild to pony up.
In a court filing, the federal attorneys argued that states are akin to other private plaintiffs and are not exempt from posting a bond.
“In particular, Congress provided for complementary antitrust enforcement by the federal government and private parties — but made clear that it was not a system of equals,” the DOJ said in its filing.
Paramount and the Writers Guild declined to comment on the filing. A spokesperson for California Attorney General Rob Bonta said “We stand behind our briefing in this matter and look forward to presenting our case in court at the September 24th hearing.”
The two sides are also expected to meet in a court-ordered settlement conference on Oct. 14 and 15.
The move by DOJ is likely to increase the tension between state attorneys general and the federal government around antitrust enforcement. By essentially calling the states second-class enforcers, the DOJ could further stymie a historically cooperative relationship.
Before Tuesday’s filing, one of the Democratic attorneys general helping lead the Paramount suit, Colorado’s Phil Weiser, called out the Trump administration for what he termed politically motivated antitrust enforcement.
Earlier this year the department reached a surprise settlement with Live Nation Entertainment Inc. before a bipartisan group of states won a trial over claims the company illegally monopolized much of the live music industry. The Justice Department also signed off on a broadcast merger — Nexstar Media Group Inc.’s takeover of Tegna Inc. — that states including California are challenging in court.
Paramount is pushing for the bond to recover losses incurred from the delay in closing the deal. The company is required to pay fees of roughly $7 million a day if it doesn’t complete the acquisition by the end of this month. Paramount said it calculated the bond amount based on maximum potential late fees owed. The company agreed to the payments in order to beat out Netflix Inc. in a heated bidding war for Warner Bros.
US District Judge Araceli Martínez-Olguín, who is overseeing the case in Oakland, California, previously declined to order a bond in July, saying the states have demonstrated they “bring suit to enforce important public interests.”
The states and Writers Guild also argue that Paramount has forfeited any right to a bond when it voluntarily agreed to not close the acquisition until early June — to give time for Martínez-Olguín to issue a ruling after the March trial. The DOJ is not taking a position on that argument, according to its filing.
The department already concluded the deal wouldn’t harm competition. While states can still protect their interests, the federal government should take the lead in challenging mergers, a senior DOJ antitrust official told Bloomberg News. Federal merger enforcement policy is being undermined by the states’ lawsuit, according to the official, who asked not to be identified because they weren’t authorized to speak publicly.
“Through the bond requirement and other limitations on state and private party enforcement of the Sherman Act, courts have been able to avoid constitutional tensions that might otherwise be present,” the DOJ said in the court filing.
Paramount has secured regulatory clearance from nearly 70 jurisdictions and the lawsuits from the states and the writers guild are the only impediments to closing the merger.
The merger would combine two of the largest Hollywood studios, two large owners of cable TV channels and the Paramount+ and HBO Max streaming services.
A group of states, along with the Writers Guild, has argued that the merger would hurt film and television distribution and diminish competition for the services of screenwriters.
In remarks at an antitrust conference in Washington on Tuesday, Weiser said the states now feel “pressure” to bring merger lawsuits quickly to prevent parties from closing deals after the federal government finishes its review.
The Colorado official cited the closing of the Nexstar-Tegna deal within hours of Justice Department clearance despite a lawsuit by states seeking to block it. While the states later won an injunction forcing Nexstar to operate the companies separately pending a trial next year, the company has already violated that court order, he said.
The current merger review system “was set up on the premise the federal government would be acting on the merits,” Weiser said.
That doesn’t reflect “the realities we’re in,” he said, calling the Justice Department under Trump an “inconsistent and unreliable enforcer of antitrust law.”
Weiser said that DOJ associate attorney general Stanley Woodward has made it hard for federal antitrust enforcers to do their jobs when he’s said the department shouldn’t take antitrust cases to trial.
A Democrat who has served as attorney general since 2019, Weiser is now running for Colorado governor.
Photo: The Paramount Studios in Los Angeles. Photographer: Ethan Swope/Bloomberg
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