Two key U.S. House Democrats are formally questioning Paramount Skydance CEO David Ellison over potential efforts to alter CNN's news coverage of Donald Trump to win regulatory approval for a merger with Warner Brothers Discovery.
"A merger between Paramount Skydance and Warner would dangerously concentrate media power into a single conglomerate and bring more independent voices under presidential influence," Representatives Jamie Raskin and Frank Pallone wrote in a letter Tuesday, according to Reuters.
The congressional inquiry heaps political risk on a deal already under pressure. Two press freedom groups, Freedom of the Press Foundation and Reporters Without Borders, recently used their status as Paramount shareholders to demand company records. They are investigating potential breaches of fiduciary duty as Paramount's stock price has fallen from nearly $20 last September to $10.78 on Monday. The groups cited concerns of "blatant corruption" following a series of decisions that appeared to favor the former president.
This merger now faces significant headwinds, including a potential antitrust lawsuit from California's Attorney General, Rob Bonta, who stated there are "red flags everywhere" with the deal. The combination of shareholder activism, congressional inquiry, and state-level antitrust threats creates a complex and uncertain path forward for what would be a landmark media consolidation.
The shareholder groups' demand, filed under Delaware's Section 220, lists several actions they deem ethically questionable and financially damaging. These include an alleged "side deal" to run $15 million to $20 million in "public service announcements" for Trump, a $16 million payment to a foundation for Trump's future presidential library, and promises of "sweeping" changes at CNN, which is currently owned by Warner Bros. Discovery.
These moves coincide with a 40 percent drop in the market capitalization of CBS, resulting in an $8 billion loss in shareholder value, according to the press organizations. They also point to other questionable business decisions by Skydance since taking over, including canceling the highly-rated "The Late Show with Stephen Colbert" and acquiring domestic broadcasting rights for the Ultimate Fighting Championship in a seven-year, $7.7 billion deal. Paramount is legally required to respond to the shareholders' demand by Thursday.
This article is for informational purposes only and does not constitute investment advice.
