The chairman of the Federal Communications Commission leaned on his expertise as an attorney when opining about a fresh legal challenge brought by several state attorneys general over Paramount’s proposed acquisition of Warner Bros Discovery (WBD).
Speaking at an event organized by Nexstar Media Group’s political publication The Hill on Wednesday, FCC Chairman Brendan Carr said the lawsuit brought by California and several other states on Monday appeared to lack justification under existing federal antitrust rules.
Carr said the legal justification for the case seemed to rest on the idea that the acquisition included cable outlet CNN, which is owned by WBD and currently competes in the TV news space against Paramount-owned CBS News.
The case actually involves concerns on numerous elements of the proposed transaction, including the effect on a single large company having outsized control over theatrical movie releases, film and television production and a massive portfolio of broadcast channels and cable networks, CBS and CNN among them.
Some reports indicate the lawsuit might be resolved out of court if Paramount agrees to spin out CNN as a separate business, which neither company has confirmed. Carr focused heavily on that element of the case.
“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 on Wednesday. “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.”
Carr was also questioned about the appearance of a cozy relationship between himself and Paramount in light of a ProPublica story published this week that found he and other agency officials accepted tickets and other gifts from Paramount while the company had business deals pending before the FCC, including its merger with Skydance Media.
“I have no idea what that basis for that is,” Carr said. “It sounds like it has no basis at all.”
The basis for the report were financial disclosure forms that Carr created and furnished to the FCC, stretching back several years, including a portion of his career when he was a commissioner at the agency and not its chairman. Other current and former FCC officials appointed by Republican and Democratic presidents alike also accepted gifts from Paramount, ProPublica noted, again using financial disclosure forms obtained by the outlet.
Paramount last year emerged as the victor of a protracted bidding war for WBD, which was sparked initially by its unsolicited offer to acquire the company. At one point, Netflix made a superior offer that WBD accepted, but Paramount continued to pursue the company and WBD’s board ultimately found a later offer made by Paramount to be superior. Netflix was paid a break-up fee by Paramount, the companies disclosed.
The deal received the approval of the U.S. Department of Justice on antitrust grounds last month, with the FCC still has yet to act on the matter. The acquisition is subject to FCC oversight because Paramount holds broadcast licenses for two dozen CBS-owned local TV stations and intends to use funding from foreign investors and sources to bankroll its purchase of WBD. Federal law limits foreign ownership of licensed broadcast stations.
Officials in the United Kingdom have also expressed a willingness to block the deal based on a variety of elements, including Paramount’s ownership of a public service broadcast network and WBD’s control of cable networks and streaming platforms there.
