Key Takeaways
- Paramount has explored establishing an independent editorial board for CNN to safeguard journalistic autonomy.
- Company officials confirmed that divesting CNN remains “on the table” as a potential solution to California’s antitrust challenge against the $81 billion Warner Bros. Discovery merger.
- Twelve states, led by California, have challenged the acquisition, arguing it would concentrate excessive control over entertainment and cable television markets.
- Paramount’s top legal executive openly discussed the possibility of relocating operations outside California.
- While UK authorities have approved the transaction, California’s legal challenge represents the final significant regulatory barrier.
Shares of Paramount (PSKY) advanced 1.28% following indications that the entertainment giant might divest CNN to address the antitrust litigation threatening its $81 billion Warner Bros. Discovery (WBD) acquisition, with WBD shares climbing 2.14%.
Paramount Skydance Corporation Class B Common Stock, PSKY
During Tuesday’s Politico California Agenda conference, Paramount’s chief legal officer Makan Delrahim indicated that every possibility, including divesting CNN, remains under consideration.
Delrahim marked a significant moment by becoming the first Paramount official to openly acknowledge potential relocation from California. He emphasized that corporate leaders face “a fiduciary duty to your shareholders” that may necessitate difficult decisions.
He suggested that California’s future governor should carefully consider the implications, noting he “wouldn’t want to lose Hollywood from the state” if in that position.
California’s Attorney General Rob Bonta spearheaded a coalition of twelve state attorneys general challenging the combination. Their complaint contends the merger would establish a “media behemoth” capable of inflating consumer prices while diminishing marketplace competition across film and television sectors.
The litigation is set for trial in March. State officials have rejected Paramount’s commitment to distribute 30 theatrical releases annually as insufficiently binding.
Safeguarding CNN’s Editorial Independence
Prior to the legal challenge, Paramount had initiated conversations about establishing an independent editorial board for CNN. This mechanism would provide oversight and address apprehensions regarding journalistic independence following the ownership transition.
“We always remain open to internal improvements to journalistic integrity,” the company stated Wednesday.
Such arrangements have precedent. When News Corp acquired Dow Jones in 2007, it established a special committee dedicated to preserving the Wall Street Journal’s editorial independence.
Entertainment industry power broker Ariel Emanuel, who maintains close ties to Paramount CEO David Ellison, publicly proposed the editorial board concept during a CNBC appearance this month “so that everybody’s calm about news and possibly Larry Ellison controlling CNN and CBS.”
David Ellison is Larry Ellison’s son, and the elder Ellison is a Trump supporter. CNN has maintained critical coverage of Trump, who regularly attacks the network’s reporting.
Claims of Political Influence
Several CBS journalists have raised concerns about political interference following Ellison’s appointment of Free Press founder Bari Weiss to the CBS News editor in chief position last fall. The network has categorically rejected allegations of political meddling.
Last year, Paramount reached a $16 million settlement with President Trump regarding a lawsuit over editorial decisions made during a “60 Minutes” interview featuring former Vice President Kamala Harris.
In a New York Times opinion piece published last week, Ellison argued that California’s legal action isn’t genuinely motivated by antitrust concerns, but rather represents an effort “intended to prevent him from owning CNN.”
The transaction has secured regulatory clearance from authorities in the United States, European Union, United Kingdom, China, and additional territories. British regulators required five-year commitments regarding programming output and editorial independence for Channel 5 news from CNN International and CBS News before granting approval.
California’s ongoing lawsuit now stands as the sole remaining regulatory obstacle preventing the deal’s completion.
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