Federal Communications Commission Chairman Brendan Carr said on Wednesday he doubts a 12-state coalition, led by California, will succeed in blocking the pending merger between Paramount Skydance and Warner Bros. Discovery.
California Attorney General Rob Bonta filed the antitrust lawsuit on Monday, asking a federal court in San Francisco to grant a preliminary injunction that would prevent the transaction from closing while litigation plays out. The Democratic official later requested a 14-day temporary restraining order to pause the deal while the court considers the broader injunction request.
Carr believes the blue states’ legal challenge is not a “legitimate” effort, considering Bonta reportedly wanted Paramount to sell CNN if the entertainment studio acquired the cable news channel’s parent company.
“There was a story that broke a couple weeks ago that said that California was floating the idea, according to news reports, of dropping all of the antitrust litigation if there was one condition that was met, which is that the purchase involved the spinning off of CNN,” Carr said in an interview at the Hill Nation Summit in Washington, D.C.
“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,” he added. “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.”
When he announced the expected lawsuit on Monday, Bonta denied his reported interest in a CNN divestiture.
“The gossip machine is on overdrive right now,” he said in response to a reporter’s question at a press conference in front of the famous Hollywood sign. “People are saying things that have no relationship to the facts, to the truth.”
The FCC chairman’s remarks come as the commission actively reviews foreign investments in the $110 billion merger, the largest in Hollywood history.
Paramount is seeking the FCC’s approval to raise total foreign equity in the merger to 49.5%, with sovereign wealth funds from Saudi Arabia, Qatar, and the United Arab Emirates accounting for 38.5% of the equity. The FCC has not made a decision on the review yet, and Carr did not provide an update on Wednesday.
Bonta’s lawsuit left out any mention of foreign investments in the combined Paramount-Warner Bros. entity, but the topic has been a cause of concern for many Democratic lawmakers who wish to halt the merger.
The antitrust case has been assigned to U.S. District Judge P. Casey Pitts, an appointee of former President Joe Biden in the Northern District of California. Pitts will hold a Friday hearing on Bonta’s motion for a temporary restraining order.
The plaintiffs want the federal judge to issue his decision by July 22, the earliest date by which Paramount intends to close the transaction. It is also the deadline for when the European Union intends to either approve or reject the merger within its jurisdiction.
The Department of Justice gave its regulatory approval to the merger last month, adding the United States to the list of countries that gave Paramount and Warner Bros. their blessing.
Paramount hopes to close the transaction by the end of the third quarter on Sept. 30, barring any court order that halts the deal. If the deadline is not met, Paramount would have to pay Warner Bros. shareholders about $650 million per quarter for every quarter the deal is not closed.
Paramount vowed to defend the merger in court if the lawsuit proceeds.
“The lawsuit filed by the state attorneys general, in the most generous light, reflects a fundamentally flawed application of the antitrust laws and is wrong on both the facts and the law,” a spokesperson said. “Delaying this transaction will only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood and cost California tens of thousands of entertainment jobs.”
Paramount filed an emergency motion on Wednesday seeking Judge Pitts’s recusal from the case that would be reassigned to a different Biden-appointed judge who is already considering a related action in the federal district.
U.S. District Judge Araceli Martinez-Olguin is presiding over a preexisting suit brought by Paramount+ subscribers. Additionally, the Writers Guild of America filed a separate lawsuit on Tuesday to block the merger itself. Martinez-Olguin is considering whether all three pending cases should be related.
CALIFORNIA LEADS MULTISTATE ANTITRUST LAWSUIT TO BLOCK PARAMOUNT-WARNER BROS. MERGER
Earlier Wednesday, ProPublica reported that Carr and FCC commissioners accepted expensive tickets to the Kennedy Center Honors gala in December after the agency approved Skydance Media’s $8 billion acquisition of Paramount Global last year. The black-tie event was broadcast by CBS, a subsidiary of Paramount. The Trump-appointed chairman disputed the report.
“I have no idea what the basis for that is,” Carr said at the Hill Nation Summit. “It sounds like it has no basis at all.”