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Cravath’s CNN Probe Tests Firm’s Long Alliance With WarnerMedia

Feb. 7, 2022, 10:30 AM

Cravath, Swaine & Moore, a Wall Street law firm that has long championed the legal causes of WarnerMedia, faces the delicate task of advancing a probe of its ally’s CNN unit after the departure of its longtime president, Jeff Zucker.

The investigation is in the hands of Cravath partners Katherine Forrest, a former federal district judge in New York, and Benjamin Gruenstein, who has worked with companies on criminal antitrust and insider trading matters, among other engagements.

A person familiar with the inquiry confirmed the two lawyers’ roles. Forrest once represented Time Warner, which later became WarnerMedia, when recording artists unsuccessfully sought to apply pre-internet music contracts to the digital age.

Cravath in 2019 helped defeat the Justice Department’s challenge of its $85 billion acquisition of Time Warner by AT&T Inc., completed the previous year. The Justice Department loss marked a major win for the firm’s antitrust practice.

Cravath’s newest role, probing the inner workings of WarnerMedia’s CNN unit, is a departure from those past efforts. It comes at a sensitive time for the company as AT&T effectively seeks to unwind the 2018 merger by selling its media assets to Discovery Inc.

Cravath and WarnerMedia declined to comment for this story. Rolling Stone first reported Forrest’s role on Feb. 3.

Zucker’s exit on Feb. 2 over his failure to disclose a consensual relationship with a longtime subordinate left CNN without a leader during the key pivot point in the cable news network’s four-decade history.

Cravath’s CNN work began last year as part of a probe into host Chris Cuomo’s actions involving his brother, former Gov. Andrew Cuomo (D-N.Y.), a separate person familiar with the matter confirmed. CNN fired Chris Cuomo in December, four months after his brother resigned amid accusations of sexual harassment.

Forrest, who returned to Cravath’s partnership in 2018 after more than seven years as a federal district judge in New York, is a former federal prosecutor and seasoned litigator who has expertise handling legal issues in several industries.

She left Cravath in 2010 to join the Justice Department’s antitrust division. Forrest was appointed to the federal bench the following year.

She continued to receive $380,000 a year from Cravath during her time in public service, according to federal financial disclosures. Forrest cited personal reasons for leaving the bench to return to Cravath.

Gruenstein, a former clerk to U.S. Supreme Court Justice David Souter, is another former federal prosecutor who joined Cravath in 2008. He made partner in 2012 and is now a member of Cravath’s investigations and regulatory enforcement practice.

Longstanding Ties

Cravath previously advised Time Warner on its ultimately ill-fated merger with America Online Inc. in 2001, a landmark tie-up between new and old media enterprises that saw Cravath receive a $35 million success fee for its counsel.

At the time that was reportedly one of the largest-ever windfalls for legal advisers on a merger deal. The AOL Time Warner union was dissolved less than a decade later, although Cravath’s relationship endured.

The firm handled the 2009 spin-off of Time Warner Cable Inc., as well as the media company’s subsequent spin-off in 2013 of its former publishing business, New York-based Time Inc.

Christopher Bogart, a former Cravath associate and current CEO of litigation funder Burford Capital Ltd., is a former general counsel at Time Warner who went on to serve as CEO of Time Warner Cable.

Time Inc., the magazine giant long associated with the old Time Warner media conglomerate, was founded in 1923 by Henry Luce, whose brother-in-law was former Cravath presiding partner Maurice “Tex” Moore, who died in 1986.

While Cravath continues to advise former Time Warner properties, the firm was not one of the six firms to land lead roles on AT&T’s $43 billion deal announced last year to merge its media operations, including CNN, with Discovery. That tax-advantaged transaction still awaits regulatory approval.

Cravath, however, has not been left out of media industry consolidation. The firm is advising Amazon.com Inc. on its proposed $9 billion bid to acquire the film studio Metro-Goldwyn-Mayer Inc., another union whose fate awaits regulatory review.

Cravath for years has been a major influencer within Big Law. After Paul Cravath in the early 20th century developed an approach for hiring and training lawyers, rivals mimicked the model for what became widely known as the “Cravath System.

The firm for years also set the pace for lawyer salaries through what is still called the “Cravath Scale.” Partners at the firm, which recently moved to a modified lockstep compensation system, made nearly $4.6 million apiece in average profits in 2020, according to data compiled by The American Lawyer.

VIDEO: Big Law’s Big Paychecks: Partner Compensation, Explained

To contact the reporter on this story: Brian Baxter in New York at bbaxter@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; John Hughes at jhughes@bloombergindustry.com