By now, you have heard the news that the much-debated “merger” of Warner Brothers Discovery with Paramount/Skydance is likely to be completed in the next two weeks. That development follows the announcement that a settlement was reached with a group of state Attorneys General who had sued to block the $110 billion deal. (A second lawsuit from the Writers Guild trade union has apparently also been resolved with a promise of contributions to a healthcare fund and a promise to prevent layoffs at CBS News for the next five years.)
Paramount CEO David Ellison and his father, Oracle CEO Larry Ellison, are probably still very happy to finally land the prize they have been pursuing for over a year. They first had to fight off Netflix, which appeared to be the initial winner in the bidding, before ratcheting up their offer and winning that fight this past February.
The federal government signed off on the deal relatively quickly, no surprise given the personal and political relationships between the Ellisons and the Trump White House. (Yeah, that’s the same “People’s House” that CNN, the network Paramount is about to acquire, has been banned from. More on that in a moment.) Along the way, the Ellisons picked up a 49.5% foreign investment backing their offer, primarily from Saudi Arabia, Qatar, and Abu Dhabi. The Brendan Carr-led FCC had no problem signing off on that aspect of the deal.
But California’s Attorney General, Rob Bonta—who was apparently seeking his own political future—sued to block the Paramount-WBD deal. He was ultimately joined by a group of other state AGs, all of whom claimed to be seeking “structural remedies” before they would allow the deal to proceed.
Many people assumed that would result in some divestitures from the combined media giants. Based on the few “concessions” Paramount agreed to in the settlement, many people will be disappointed. (And somehow it got done just before that nasty $7 Million-a-day “ticking” fee was set to start ringing up.)
In the end, the California AG appears to have caved as political pressure on him increased, and as Bloomberg News reported, he found himself isolated. For its part, Paramount had recently made louder noises that it might move its Southern California headquarters to that other movie-making capital of the nation—Nashville, Tennessee?
While the realistic chances of that happening seemed low, the threat alone got Bonta’s phone ringing with calls from the Mayor’s office in LA to the Governor’s office in Sacramento, and then a growing chorus of tech titans from Silicon Valley. The movie-making industry, and in turn the people who work in it, have been hurting badly in and around Hollywood. The mere threat of moving vans pulling up to the famous Paramount Studios gate was ultimately enough to get AG Bonta willing to settle for some promises not to move, make at least 30 movies a year, separate some distribution deals for cable networks and, perhaps most insignificantly of all, appoint something called an “independent editorial board” to resolve issues at CNN and CBS News.
Yeah, that definitely qualifies as a “Structural remedy.” One likely to be as effective as the stuff they use to patch potholes in the middle of winter. Did you know that CBS News already has an “editorial ombudsman”?
We didn’t either.
But we’re going to suggest that the biggest loser from this settlement getting done isn't located in California, New York, or any other state whose Attorney General wanted to block this deal.
No, the individual we’re thinking of lives in Texas. And his name is Perry Sook.
Nexstar’s Chairman and CEO is also involved in a lawsuit with the California AG. Rob Bonta brought the legal action to unwind Nexstar’s rapidly approved and closed merger with rival broadcast group TEGNA.
And the hand that Sook and Nexstar now hold at the high-stakes table to get a deal done to fully absorb TEGNA and its TV stations—is seemingly far weaker than the one the Ellisons had.
For one thing, Nexstar owns local television stations in nearly every market in California, including Los Angeles (#2) and San Francisco (#9), as well as San Diego, Sacramento, Fresno, and Bakersfield. TEGNA also has stations in San Diego and Sacramento, which would give the merged company multiple stations in those two markets. Nexstar’s corporate headquarters are in a Dallas suburb, while TEGNA’s are in a Washington, DC suburb.
Thus, Mr. Sook and company don’t really have a “give us what we want, or we’ll move” threat to play here. That’s aside from making some insignificant relocation threat—like maybe moving some CW network work out of California. We also don’t think a promise to produce more local news will appease Mr. Bonta.
Worse for Nexstar’s prospects is the growing backlash now facing the California Attorney General for agreeing to—what many already see as what one industry insider in the Golden State labeled it: “A very weak-ass deal”— to settle with Paramount and the Ellisons, before heading to trial.
We wouldn’t be surprised to see AG Bonta suddenly become very unwilling to find any way to settle with Nexstar before the parties are scheduled to arrive in a US District Court courtroom in Sacramento next summer.
At least not without some actual “structural remedies” being found.
Meanwhile, there’s another Federal lawsuit we need to explore: the aforementioned CNN, along with MS Now and Politico, sued the Trump administration over the weekend. Their action is over the President’s “ban” on those three media outlets from being in the White House, let alone even being on the grounds.
The reason for their “ban,” as given by the President: Their continued reporting of what he deems to be “fake news.” An activity that has been absolutely protected by something in the First Amendment to the Constitution for nearly 235 years.
The action raised questions that dominated industry conversations over the weekend about what would happen as the ban took effect. CNN is a key part of the “TV Pool” that covers the President wherever he goes. What’s ironic about the network being prevented from fulfilling its role in the Pool is that the then-nascent Cable News Network actually had to bring a lawsuit back in 1981 to be permitted to be part of the TV Pool. At the time, it was the exclusive group of the three major broadcast TV networks’ news divisions. CNN won that lawsuit and became a permanent part of the pool in 1982.
But the real drama centered on just what all the other TV networks would do in light of the ban covering their fellow news organizations and members of the White House Correspondents Association. That is the same WHCA that held its delayed annual dinner that the President attended for a second time back in July, after the initial event was disrupted by a lone man who attempted to breach a security checkpoint manned by the Secret Service.
In a rare show of solidarity, nearly all major news organizations chose not to cover the President’s appearances on Monday with video, both in Washington and later in New York City. Even print outlets withheld still photos of those events until late in the day.
Whether this “mini-blackout” of the President’s public sightings will matter to the man who first built his public, then political persona, in the center of the intense coverage of the media that he now demeans and often sues at the slightest whim, remains to be seen.
It seems to us, as was noted in a few places this Monday, like rather odd behavior from the very man who has taken an oath (on two different occasions) that states “I will, to the best of my ability, preserve, protect and defend the Constitution of the United States.”
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