CNN’s Viewpoint Diversity Could Factor in Paramount-WBD Sign-Off

All eyes have turned to Paramount Skydance now that Netflix has withdrawn its proposal to acquire Warner Bros. Discovery. Paramount, in its blockbuster deal with WBD, is poised to acquire WBD’s valuable film library, studio, and HBO Max streaming video on demand service, as well as its cable assets—including most prominently CNN. Paramount has said it expects to close the deal in the third quarter of this year.

The Department of Justice Antitrust Division took no action to delay the closing of Paramount’s $110 billion deal before the termination of the statutory Hart-Scott-Rodino, or HSR, waiting period after Paramount filed its certification of compliance with the DOJ’s Second Request review. Per HSR premerger review, Paramount is now free to close its acquisition of WBD, but it must first pass other regulatory reviews and obtain WBD shareholder approval.

Nonetheless, it appears at first glance that Paramount will achieve its goal. All systems seem to be a “go.”

But as Yogi put it, “it ain’t over ’til it’s over.” From an antitrust perspective, several questions arise that warrant attention from markets and other observers:

• What are the likely factors that prompted the DOJ to take no action thus far under its antitrust merger review power?
• Does non-action by the DOJ before the end of the waiting period signify binding approval, or could the DOJ still legally step in to enjoin or condition approval and, if so, on what possible grounds?
• Do states have authority under federal or state antitrust law to step in and even override any non-action by the DOJ? And if so, how does that work, and what issues might they focus on? This last question isn’t hypothetical, as the California Attorney General recently announced that his office was investigating the deal and other states might join that investigation.

Presumably the DOJ chose not to investigate further because it found insufficient grounds to conclude that the effect of the merger “may be substantially to lessen competition, or to tend to create a monopoly” under Section 7 of the Clayton Act, the federal antitrust merger statute.

The DOJ apparently concluded, under established criteria for assessing competitive effects of proposed mergers, that neither an HBO Max-Paramount+-steaming video on demand consolidation nor a WBD-Paramount theatrical studio consolidation would likely trigger a rebuttable presumption of illegality under Section 7.

But HSR “clearance” doesn’t constitute official approval, and it isn’t a safe harbor from further enforcement. Although relatively rare, there is precedent for the Federal Trade Commission and the DOJ to sue post-consummation to undo a merger, or “unscramble the eggs.” There is no legal impediment to doing so.

The closest example is Chicago Bridge & Iron Co. N.V. v. FTC: The FTC—after allowing the HSR waiting period to expire with no conditions after a Second Request, and soon after consummation of the merger and integration of the two companies—ordered the merged entity to unwind and divest one of them.

CNN’s Independence

Paramount so far has apparently allayed any DOJ concerns regarding competitive effects in streaming and studio consolidation. But a wave of media and Congressional attention has now zeroed in on Paramount’s intentions with CNN. Paramount CEO David Ellison previously said that it would undergo substantial transformation in its viewpoint and news delivery posture, possibly in some measure combined with CBS and overseen, as with CBS, by a “Bias Ombudsman.” Quite recently, however, he has made statements promising CNN’s independence going forward.

In any case, there is little doubt that CNN by scope and quality provides important diversity within the media landscape, however the relevant antitrust market is defined—whether comprising network and cable stations, digital news, or more broadly.

Viewpoint Diversity: Antitrust Principle

Perhaps less well known is that viewpoint diversity is a foundational antitrust principle. And the DOJ itself has recently emphasized this principle, citing decades of precedent, whether concerning conduct or a merger. In a federal district court case, plaintiff Children’s Health Defense alleged that several media outlets colluded with digital platforms to censor the plaintiff’s anti-vaccination views. The DOJ weighed in last July with a Statement of Interest on the law, supporting the allegation that suppression of viewpoints can constitute an antitrust violation.

The DOJ argued that viewpoint diversity is an antitrust value, a form of non-economic competition to be protected by antitrust no less than competition for other products and services, and that the alleged censorship in the case denied news consumers access to the plaintiff’s views. This view stands on the shoulders of some 50 years of solid precedent.

The DOJ could yet apply this principle to CNN. Notably, both the DOJ and FTC in the second Trump administration have returned to a more flexible approach to mergers with anticompetitive effects, imposing behavioral remedies and conditioning approval on divestitures. Here, the antitrust significance lies in competition among viewpoints, not a preference by antitrust for one viewpoint or another.

And case law locates this principle at the foundation of democracy itself, with the term “marketplace of ideas” commonly traced to a famous dissenting opinion of Justice Oliver Wendell Holmes Jr. in 1919. Although the case concerned government restraints on speech, case law has transported the term to antitrust regarding private restraints, noting consonance in the principle from the First Amendment to antitrust.

State Action Possible

Further, federal antitrust enforcement doesn’t stand alone. California Attorney General Rob Bonta announced on Feb. 27 that the state is investigating the deal, potentially along with other state attorneys general—the latest example (along with their recent continuation of the action against Live Nation-Ticketmaster) of states stepping in when they view federal enforcement as possibly lacking.

Apart from streaming video and studio consolidation, whose antitrust support appears robust, states too might have CNN in their sights. The question then is whether states have antitrust jurisdiction to enjoin a deal that the DOJ may effectively have cleared, and if so, what the scope of that jurisdiction might be.

The simple answer is that yes, they do. And as a practical matter, where the commerce at issue is national, no respondent could feasibly carve out a concession on its conduct as to a given state, separate from the conduct nationwide—and clearly not in Paramount’s case.

More than Hollywood awaits the denouement in this high-stakes drama. Stay tuned.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Richard Wolfram is a New York-based attorney whose practice focuses on antitrust litigation and counseling.

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