Federal Communications Commission Chairman Brendan Carr on Wednesday criticized a multistate effort to block the proposed acquisition of Warner Bros. Discovery by Paramount, calling the challenge an "illegitimate antitrust case." Carr voiced doubt that the coalition of 12 state attorneys general, led by California, would be successful in its challenge to the $110 billion deal.
"I doubt it," Carr stated when asked about the states' lawsuit during the Hill Nation Summit in Washington, D.C. He pointed to news reports suggesting that California had previously considered dropping its antitrust litigation if CNN were spun off from the combined company. "Now, 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 said. "So I think that’s a bit of a tell that this really isn’t a legitimate antitrust case, but ultimately that’ll be up for the courts to decide."
The comments followed a lawsuit filed two days prior by the 12 state attorneys general, who argue that the proposed combination would reduce competition in theatrical film distribution and cable television programming. Their lawsuit claims this would give the merged company greater leverage over movie theaters and pay-TV distributors, potentially leading to higher prices, fewer films, and reduced investment in content. The coalition includes Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington, in addition to California.
The states are seeking a temporary restraining order and preliminary injunction to halt the transaction while the legal proceedings continue. The agreement includes a "ticking" payment provision for WBD shareholders if the transaction closes after September 30, increasing the deal's cost. A court-ordered delay could also complicate financing and other closing conditions, adding 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. This suit, brought on behalf of Paramount shareholder Paul Robbins, alleges that Paramount CEO David Ellison and other company insiders breached their fiduciary duties by 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.
Carr also rejected allegations that the FCC had accepted gifts from Paramount, stating, "I have no idea what the basis for that is. It sounds like it has zero basis at all."
Paramount has reportedly made commitments to keep its studio operations in California as part of discussions with state officials. However, reports citing unnamed sources also indicated the company was considering moving operations out of the state if the merger were blocked or delayed. Tennessee's Republican Deputy Gov. Stuart McWhorter has invited Paramount CEO David Ellison to relocate the company's headquarters to the state, citing its business-friendly environment. Paramount has not publicly announced any relocation plans.
Los Angeles City councilwoman Nithya Raman praised the state attorneys general for filing the lawsuit, describing it as a "major step forward" for the campaign to block the merger. She argued that the merger would harm Los Angeles residents by resulting in "higher prices, fewer productions, less creative freedom and fewer jobs."