Paramount wants a trial to start in November in the antitrust lawsuit brought by a dozen state attorneys general and the Writers Guild America. Not surprisingly, the state AGs and the guild want an April start to the proceedings.
The sides outlined their proposals in a joint filing Friday, with the ultimate decision on scheduling left to the federal judge in the case, Araceli Martinez-Olguin.
“The parties have discussed the trial schedule, but they have not reached agreement,” the parties wrote.
The trial dates are hugely important for the transaction, and even Paramount’s proposed date likely will cost the company hundreds of millions. After September 30, Paramount will be on the hook for about $7 million for every day that the transaction doesn’t close, under an agreement with WBD that was a sweetener to the deal.
A Paramount spokesperson said, “Our request for a November trial date is more than sufficient to give both sides the time they need to conduct discovery, gather evidence, and prepare for trial. Plaintiffs’ request to delay proceedings until April is nothing more than a stonewalling tactic that goes well beyond the timelines sought in similar prior proceedings and ignores the substantial evidence plaintiffs have already received in this matter. Delay will also harm the many individuals outside this courtroom who will be denied the expanded content offerings and industry stability that a combined Paramount-WBD promises to bring.”
California Attorney General Rob Bonta, who is leading 12 states in the lawsuit, said in a statement, “Our challenge to the unlawful Warner Bros./Paramount merger is a clean-cut antitrust challenge through and through: it’s about protecting the vibrancy of an industry, the pockets of consumers, and the quality of films and television programs that take center stage in many of our lives. This challenge deserves careful and thorough review and today my office and attorneys general across the country asked the court for a trial date next spring. We are eager to continue to make our case and look forward to a final determination of the schedule by the court.”
Last week, Paramount said it would not close the merger until June 1, 2027, or until days after the legal issues are resolved, and indicated it wanted to go directly to trial. Its announcement came just days after the judge granted the state AGs a temporary restraining order that prohibited the transaction from closing for 14 days, an order that was later extended to 28 days.
The company spokeswoman said a trial “on the merits is the best and most direct way for us to prove what we’ve said from the start — this transaction is lawful, pro-competitive, and raises no antitrust concerns.”
In the filing Friday, Paramount proposed a 12-day trial starting November 4 that would encompass the cases brought by the states and the WGA.
Paramount also noted that the later date would give the judge “much less time to decide” the case by June, the outside date it had set for the merger to close, as well as time for the company to appeal.
Among other things, they noted that the DOJ’s antitrust case seeking to block AT&T’s merger with Time Warner went to trial on March 19, 2018, four months after the federal government brought the case. Makan Delrahim, who is Paramount’s chief legal officer, was then the chief of the DOJ’s antitrust division; on the other side was attorney Daniel Petrocelli, representing Time Warner, and now representing WBD in this case.
The company also noted that Bonta had last week favored a January trial start, but now was proposing a date four months later.
“Given the stakes of this case, there is no basis and no time to delay for the sake of delay, particularly when delay significantly prejudices Defendants and the Hollywood ecosystem more broadly,” Paramount’s legal team wrote in the filing.
The company also argued that Paramount and the WGA will have had sufficient time for discovery.
Paramount’s legal team wrote, “State Plaintiffs had six-plus months before they filed their complaint to conduct unilateral discovery regarding the proposed transaction. State Plaintiffs also had the benefit of waivers granted by Defendants to enable the U.S. Department of Justice (DOJ) to share with State Plaintiffs all information and materials that Defendants produced to the DOJ. In sum, the discovery that State Plaintiffs received many months ago includes over two million documents from more than 80 of Defendants’ employees.”
The company’s legal team noted that the later date would require them to refile merger materials with the Justice Department, which has already cleared the transaction, and that it would leave the creative community in a period of uncertainty, as Paramount plans to boost production to 30 films per year.
The state AGs and WGA proposed a start of April 5, 2027, lasting at least 12-15 days, with each plaintiff presenting their cases sequentially.
The state plaintiffs wrote that extensive discovery is needed, including of “the definition of the relevant product and geographic markets, the nature and scope of harm in those markets, whether expansion by other firms will prevent harm in those markets, and whether the merger will produce verifiable, merger-specific efficiencies sufficient to outweigh harm in those markets.”
They pointed specifically to areas like Paramount’s assertion that the merger will generate billions in synergies, “a claim that Plaintiff States are entitled to test in discovery, including discovery of Defendants’ integration plans for their merged company.”
The states noted that Paramount’s document productions “largely cut off” before the merger agreement was signed in February, leaving the plaintiffs with few internal documents about post-closing plans.
The state AGs wrote, “Defendants’ pre-complaint productions also do nothing to address the need for discovery from third party customers and competitors. Importantly, no depositions of percipient fact witnesses from Defendants or third parties have occurred.”
The states also contended that their schedule was “reasonable,” claiming that the 402 days from the signing of the merger agreement on February 27 to the proposed trial date “moves this case to trial more rapidly than virtually every merger case in recent history.” The AT&T-Time Warner trial started 513 days after the merger deal was signed, they noted, as opposed to when the DOJ lawsuit was filed. The state AGs also wrote that an April trial would still leave the judge with time to decide the case by June.
The state AGs also called Paramount’s proposed schedule “one-sided,” arguing, “Their extraordinarily truncated schedule unfairly favors Defendants because they (1) have information Plaintiff States need to prove their case and (2) do not bear the burden of persuasion.”
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