Federal Communications Commission Chairman Brendan Carr has criticized the multistate effort to block the proposed acquisition of Warner Bros. Discovery by Paramount and Skydance, stating that the challenge is not a "legitimate antitrust case." Carr expressed doubt on Wednesday that the coalition of 12 state attorneys general, led by California, will succeed in their legal challenge to the $110 billion deal.
Carr cited news reports suggesting that California had considered withdrawing its antitrust litigation if CNN were to be spun off from the combined company. "I don’t understand what antitrust theory you have that says there’s a problem with this acquisition that is made or broken based on one cable channel being included," Carr remarked during the Hill Nation Summit in Washington, D.C. He suggested this reporting indicated the challenge lacked a solid antitrust foundation, though he acknowledged the courts would make the final decision.
This commentary follows a lawsuit filed by the 12 state attorneys general aiming to prevent Paramount Skydance's acquisition. The lawsuit could impose financial penalties on the deal, as Warner Bros. Discovery shareholders are entitled to an additional "ticking" payment if the transaction does not close by September 30. A court-ordered delay might also complicate financing and other closing conditions, increasing pressure on both companies.
Separately, a shareholder derivative lawsuit was filed in Delaware by the Freedom of the Press Foundation and the Public Integrity Project, also seeking to block Paramount's acquisition of WBD. This suit, brought on behalf of Paramount shareholder Paul Robbins, alleges that company insiders breached their fiduciary duties by allegedly trading the editorial independence of CBS and CNN for favorable treatment from the Trump administration. The defendants have not yet responded to these allegations in court.
The states' lawsuit contends that the merger would reduce competition in theatrical film distribution and cable television programming. They argue this would grant the combined company greater leverage over movie theaters and pay-TV distributors, potentially leading to higher prices, fewer film releases, and reduced content investment. The coalition includes attorneys general from Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington, in addition to California.
In response to the litigation, Paramount has reportedly floated commitments to maintain its studio operations in California as part of discussions with state officials. Conversely, reports citing unnamed sources suggest the company has considered relocating operations out of the state if the merger faces significant delays or is blocked. Tennessee's Deputy Governor Stuart McWhorter has also extended an invitation to Paramount CEO David Ellison to relocate the company's headquarters to the state, highlighting its business-friendly environment.
Los Angeles City Councilwoman Nithya Raman has voiced support for the states' legal action, describing it as a "major step forward" for the campaign to block the merger. She argued that the transaction would negatively impact Los Angeles residents through higher prices, reduced productions, less creative freedom, and fewer jobs.