FCC Chair Critiques States’ Antitrust Challenge to Paramount-Warner Bros. Deal
Federal Communications Commission Chairman Brendan Carr has expressed strong skepticism about the challenge posed by a coalition of states to Paramount Skydance’s planned acquisition of Warner Bros. Discovery. He stated that this is “not really a legitimate antitrust case.”
During remarks made on Wednesday, Carr suggested that the group of 12 attorneys general, led by California, is unlikely to succeed in blocking the $110 billion merger. When asked about their chances, he remarked, “I doubt it,” while speaking at the Hill Nation Summit in Washington, D.C.
Interestingly, Carr pointed out that there are reports indicating California might drop its antitrust lawsuit if certain conditions are met, particularly if CNN is spun off from the new company. “According to a story published a few weeks ago, California is reportedly floating the idea of dropping all antitrust litigation if the acquisition includes a spinoff of CNN,” he said.
He further questioned the logic behind the antitrust arguments, pondering how the fate of the deal could hinge on one cable channel, which adds to his view that, “this is not actually a legitimate antitrust case.” Ultimately, he acknowledged that it will be up to the court to make a final decision.
His comments followed the announcement that the coalition of state attorneys general had officially filed a lawsuit to halt the merger. Even if their efforts fall short, the lawsuit could still impose significant costs, since WBD shareholders would receive extra payments if the merger closes after September 30, which might escalate transaction costs.
Moreover, delays ordered by the court could complicate financial arrangements and other closing conditions, intensifying pressure on both Paramount and Warner Bros. Discovery as the litigation progresses.
During the interview, Carr also rejected rumors that the FCC had accepted gifts from Paramount, saying, “I have no idea what the basis for that is. It seems completely unfounded.”
Over the last decade, commissioners from the FCC have reportedly received expensive tickets to events like Kennedy Center galas from CBS, now part of Paramount, though details remain sparse regarding any specific involvement.
The states argue that the merger would diminish competition in theatrical film distribution and cable television, enhancing the combined company’s leverage over theaters and pay-TV distributors. They also believe this could lead to higher prices, fewer films, and reduced investment in content.
The coalition, which also includes states like Arizona, Colorado, and New York, is seeking a temporary restraining order and preliminary injunction to prevent Paramount and Warner Bros. from finalizing the deal while litigation is ongoing.
Additionally, the Freedom of the Press Foundation and the Public Integrity Project have initiated a separate lawsuit in Delaware, seeking to block the acquisition based on allegations that Paramount CEO David Ellison and others have compromised CBS and CNN’s editorial independence for political favors. The defendants have not yet responded in court.
Despite a private commitment to maintaining operations in California, there are indications that Paramount may consider relocating if the merger faces obstacles. Tennessee’s Lieutenant Governor has even reached out to Paramount’s leadership, highlighting the state’s low tax rates and business-friendly climate.
While Paramount has not confirmed any relocation plans, the ongoing legal battle has already prompted recruitment efforts from other states. Meanwhile, Valli Chandrasekaran, a television writer and husband of a Los Angeles mayoral candidate, praised the actions of state officials opposing the merger, describing it as a significant stride for the #BlockTheMerger initiative.
In response to the merger discussions, Nithya Raman, a Democratic city council member, expressed her concerns on social media, emphasizing that the merger would negatively impact the residents of Los Angeles by leading to higher prices, less creative freedom, and job reductions.
