TLDR
- Paramount has discussed creating an editorial board for CNN to protect its news independence.
- A CNN sale is “on the table” to resolve California’s antitrust lawsuit blocking the $81 billion Warner Bros. Discovery deal.
- California and 11 other states filed suit claiming the merger gives Paramount too much power over film and cable TV.
- Paramount’s chief legal officer publicly acknowledged the company may leave California.
- The UK has already cleared the deal; California’s lawsuit is now the last major obstacle.
Paramount (PSKY) rose 1.28% as the company signaled it may sell CNN to resolve the antitrust lawsuit standing between it and its $81 billion acquisition of Warner Bros. Discovery (WBD), which was up 2.14%.
Paramount Skydance Corporation Class B Common Stock, PSKY
Paramount’s chief legal officer Makan Delrahim said all options, including a CNN sale, are “on the table.” He was speaking at Politico’s California Agenda conference on Tuesday.
Delrahim also became the first Paramount executive to publicly confirm the company may leave California. He said there is “a point at which you have a duty, a fiduciary duty to your shareholders.”
He added that if he were California’s next governor, he “wouldn’t want to lose Hollywood from the state.”
California Attorney General Rob Bonta, along with 11 other state attorneys general, filed suit to block the merger. They argue it would create a “media behemoth” able to raise prices and reduce competition in film and TV markets.
A trial is scheduled for March. The states have dismissed Paramount’s pledge to release 30 films a year as unenforceable.
CNN Independence Concerns
Before the lawsuit was filed, Paramount had already been discussing the creation of an editorial board for CNN. The idea is to provide oversight and ease concerns about news independence under new ownership.
“We always remain open to internal improvements to journalistic integrity,” the company said in a statement Wednesday.
The concept is not new. When News Corp bought Dow Jones in 2007, it created a special committee to protect the independence of the Wall Street Journal.
Hollywood broker Ariel Emanuel, close to Paramount CEO David Ellison, publicly floated the idea of an editorial board in a CNBC interview earlier this month “so that everybody’s calm about news and possibly Larry Ellison controlling CNN and CBS.”
Ellison is the son of Larry Ellison, a Trump ally. CNN has been critical of Trump, who frequently complains about the network’s coverage.
Political Interference Allegations
Some CBS correspondents have alleged political interference since Ellison named Free Press founder Bari Weiss as CBS News editor in chief last fall. CBS has denied political interference.
Paramount settled a lawsuit by President Trump last year for $16 million over the editing of a “60 Minutes” interview with former Vice President Kamala Harris.
Ellison wrote in a New York Times op-ed last week that the California lawsuit is not really about antitrust, but is instead “intended to prevent him from owning CNN.”
The deal has cleared regulators in the U.S., EU, UK, China, and other jurisdictions. The UK extracted five-year guarantees on programming and editorial independence for Channel 5 news from CNN International and CBS News as part of its approval.
California’s lawsuit is now the last remaining regulatory hurdle before the deal can close.
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