Roadblocks for Paramount

Readers ask me every day about the status of Paramount’s pending deal to buy CNN and the rest of Warner Bros. Discovery.

Some ask out of curiosity — “I haven’t heard much about this lately” — recognizing that we’re now in the third quarter of the year, the quarter when Paramount intends for the merger to take effect. Others ask out of trepidation — “I hope this deal doesn’t go through” — given what they’ve read about CBS News.

So here’s the latest: Paramount has obtained almost all the necessary approvals and is mostly on track to “close” (that’s banker-speak for complete) the deal this summer. But there are two regulatory roadblocks.

First, in the UK, culture minister Lisa Nandy is expected to formally challenge the merger in the coming days, which would trigger a weeks-long review.

Second, in the US, several state attorneys general are finalizing a long-anticipated antitrust lawsuit that Paramount has been trying to fend off. As I reported last night, the suit will likely be filed next week.

How could those legal challenges disrupt the deal? It’s hard to say for sure. But earlier this year, a similar coalition of state AGs succeeded in stalling Nexstar’s takeover of Tegna, a rival TV station owner. That’s because a judge froze that deal ahead of an expected antitrust trial. Nexstar is now appealing, and it filed a legal brief yesterday.

According to Puck’s resident media law expert Eriq Gardner, it’s unclear whether the UK action would actually prohibit Paramount from taking control of WBD. However, he pointed out, “every month of uncertainty raises costs, complicates financing assumptions, tests nerves, and increases pressure on dealmakers to offer concessions — like, say, a divestment of CNN — that they might otherwise resist.”

As you already know, the Justice Department OK’d the Paramount-WBD last month amid criticism of President Trump’s close ties with the company. But federal clearance doesn’t bar state attorneys from bringing their own antitrust claims.

In fact, sources tell me that the state-level officials have been probing Paramount’s lobbying of the Trump administration, among many other matters.

Representatives for Oregon AG Dan Rayfield were in court yesterday seeking documents and probing whether the Justice Department’s approval was “the product of a corrupt bargain.” An Oregon judge will hear arguments on Monday.

When I asked California AG Rob Bonta’s office for comment on the expected lawsuit, a spokesperson said the investigation remains active, “and we do not have any update to share at this time.”

The suit would also represent another instance of state AGs trying to block a merger that has already been blessed by the federal government. The state officials believe the feds have abdicated their antitrust responsibilities, so, as one of my sources remarked, “someone’s gotta do it.”

As I said on “The Source with Kaitlan Collins” last night, Paramount executives see politics at play here, since some of the Democratic AGs are up for reelection this fall, and they might see a fight with Paramount as a winning campaign issue. Then again, Paramount has been operating under a political cloud for more than a year now.

In response to questions about the likely lawsuit, a Paramount spokesperson said, “We continue to engage constructively with regulators, including State Attorneys General, and are prepared to address any legitimate antitrust issues. We are confident this transaction raises no such concerns.”

“Antitrust authorities around the world have carefully reviewed this transaction, clearing it or concluding that it does not violate any competition laws,” the spokesperson also noted.

Paramount’s allies have been circulating op-eds and articles to reiterate that view. Later today, Unleash Prosperity, a free-market policy group chaired by Stephen Moore, is sending this report (PDF) to state AGs arguing that Paramount–WBD deserves approval because it would mean “more competition, more consumer benefits, and more jobs.”

Moore, an ex-Trump economic adviser, co-authored the report with Robert Wolf, a former economic adviser to Barack Obama, so it’s billed as a bipartisan assessment. I asked a spokesperson if the report was funded in any way by Paramount or WBD, and a rep for Moore said he did not receive funding from either.

This morning, CNN alum Tom Kludt is out with a new “inside CNN” story for NYMag, saying “staffers fear that programming and personnel changes could be driven by politics as much as economics given how eager Donald Trump and his allies appear for Paramount CEO David Ellison to take control.”

Kludt also says “some at CNN hope the drama at CBS gives Ellison and other Paramount executives pause before promoting” Bari Weiss to oversee CNN, and he reports that “people close to Ellison have expressed concern to him about giving her more responsibility.”

These stories are always strange to read from the “inside” because, well, it’s complicated, and if you ask ten different employees, you’ll hear ten different POVs about the pending merger. Take Brian Steinberg’s “CNN on edge” story for Variety yesterday: He quoted an anonymous staffer saying “if you chip away at your core audience through machinations, you could really hurt the business,” and I think that’s absolutely true. He also quoted another staffer saying “I don’t have glimmers of hope and don’t see reasons for any,” and I think that’s just ridiculous.

CNN’s parent company has been bought, sold and merged over and over again. The news organization has always kept humming along. The word I would add to both NYMag and Variety’s stories is stability.

Journalists are nosy and noisy and sometimes hard to manage, but they value stability just like people in every other line of work. Under CNN CEO Mark Thompson, the news organization feels stable. If it becomes unstable, viewers and readers will notice, and that’s ultimately a danger to CNN’s bottom line.

Kludt’s story quotes Thompson making that point at a June town hall with staffers. Thompson also urged people not to “jump to conclusions” about Paramount. (As I’ve pointed out here many times, there’s a big gap between the perceptions of CBS News and the reality right now.)

Kludt also mentions Paramount’s springtime get-to-know-the-business meeting with Thompson’s management team and says “their message to executives was that CNN’s business strategy, built around increasing digital subscriptions as a buffer against the declining cable-television bundle, is working but that it needs more time.”

I believe the relevant Gen Z phrase here is: “Let us cook.”

Can Paramount make the deal math work? That’s what Joe Flint considers in a new WSJ story about “the $80 billion debt cloud hanging over David Ellison’s Warner deal.”

Flint says “much of Ellison’s financial flexibility — and the combined company’s proasspects for success — depend on delivering the $6 billion in promised synergies within three years, a target some analysts view as ambitious given the scale of the integration.” Here’s the full story…

There’s even more to read about Paramount and WBD today:

>> The LAT’s Stephen Battaglio reports that CBS correspondents Seth Doane and Jim Axelrod are “among contenders for ‘60 Minutes’ roles.”

>> Longtime newsroom boss Dick Tofel offers some thoughts on “how to run CBS News and CNN under common ownership” in this new column.

>> When HBO boss Casey Bloys made the rounds yesterday to celebrate the brand’s Emmy nomination haul, he was asked about the pending deal and pointed out that his teams have been through the merger wringer before. “We’re doing our thing, and we’ll continue to do it,” he said, and that’s all anyone really can say.

MS NOW’s Lawrence O’Donnell said the other night, “I knew with a candidacy like Graham Platner that the vetting would come from the news media. And so it has. And every stage of that vetting — every stage of it — has been disturbing.”

Last night, Platner dropped out of the Maine Senate race while blaming the “corporate media system” and “political establishment” and insisting that the assault allegations are “not real.”

While he decries a “corporate media system,” I see individual journalists who saw an important story to tell. As Puck’s Peter Hamby wrote, “The Times, CNN, Politico, the Journal — and yes, conservative muckrakers like the Free Beacon, which revealed that it was Platner’s father, not the V.A., who financed his house with a $200,000 mortgage loan — did their jobs.”

>> Has Trump finally run out of ways to avoid paying E. Jean Carroll? Yesterday, a judge “ordered the release of more than $5 million,” rejecting Trump’s attempt to delay paying her, Kara Scannell reports. (CNN)

>> “A federal appeals court for a second time said it would not quickly intervene to reverse a judge’s order that removed President Donald Trump’s name from the Kennedy Center,” Tierney Sneed and Betsy Klein reported yesterday. Among the points made by the court: Trump’s team claimed that stripping his name would hurt fundraising, but “failed to support this assertion with any specific facts or evidence.” (CNN)

>> Smithsonian secretary Lonnie G. Bunch III issued a defense of the National Museum of American History to staffers “in response to a caustic White House report accusing the museum of pushing ‘extreme political activism,’” Elahe Izadi and Geoff Edgers scooped. (WaPo)

“More than 44 million people in the U.S. watched the Mexico vs. England game — a staggering 23.2 million total audience on Telemundo, along with the 21.742 million who watched on Fox,” The Athletic’s Dan Shanoff reports.

Those Fox numbers alone make for “the most-watched U.S. English-language World Cup telecast ever that didn’t feature the USMNT.” We’re going to keep getting #s that underscore why this World Cup is different for US audiences…

>> New this morning: Netflix has inked a deal with “the Vox Media Podcast Network, now owned by James Murdoch’s Lupa Systems, for exclusive rights to video versions of podcasts ‘Unexplainable’ and ‘Switched on Pop.’” (Variety)

>> Adam Schefter and ESPN “are closing in on a long-term contract extension several years into the 2030s,” Ryan Glasspiegel reports. (FOS)

>> “John Lasker, who helped ESPN launch itself into the direct-to-consumer era… plans to leave the Disney sports-media giant in late September.” (Variety)

>> “A masked vandal smashed the glass front door to the Haaretz newspaper offices in Tel Aviv early Wednesday, in the second such attack on a media outlet this week.” (Times of Israel)

>> A judge is allowing Elon Musk to pay $1.5 million to settle an SEC lawsuit accusing him of cheating Twitter investors, despite the judge’s “significant misgivings” about the deal. (Bloomberg)

>> DuckDuckGo “can now block most video ads, particularly those on YouTube, when a video is playing in its browser.” (Engadget)

>> OpenAI has released “new voice models for more natural live conversations.” (TechCrunch)

>> X’s Community Notes system “will be updated to send users direct messages alerting them whenever a post they have interacted with has received a correction.” (TechCrunch)

This edition of Reliable Sources was edited by Andrew Kirell and produced with Liam Reilly. Email us your feedback and tips here.