Skydance/Paramount Increasingly Under Democrats' Microscope

The letter from House Commerce's Frank Pallone, D-N.J., and House Judiciary's Jamie Raskin, D-Md., was addressed to David Ellison, CEO of the newly combined company. It follows a similar letter this week to FCC Chairman Brendan Carr from Sen. Adam Schiff, D-Calif., asking about any role President Donald Trump had in influencing the agency's approval of the Skydance deal (see 2508190053). Numerous other Democratic lawmakers have also voiced criticism in recent weeks (see 2507250029). The FCC and Skydance didn't comment Thursday. The Skydance/Paramount deal closed Aug. 7 (see 2508070027).

With Democrats in the minority, it’s unlikely that their criticisms will end up having a practical effect, said Boston College law professor Brian Quinn, who specializes in mergers and acquisitions.

Public Knowledge Senior Vice President Harold Feld told us that there's arguably not a good rationale for undoing Skydance/Paramount, even if there was evidence of White House extortion and Skydance bribery, because the allegation is that the deal was held up by the administration seeking a payout.

"Two wrongs do not make a right -- illegitimate demands from the FCC or the Administration do not absolve your company from wrongdoing," wrote Pallone and Raskin. In the letter, they pointed to allegations that Skydance offered as much as $20 million in public service announcements to the Trump administration in order to get FCC approval. Paramount settling a Trump lawsuit against CBS' 60 Minutes for $16 million could also be bribery and "would likely further embolden President Trump to use lawsuits and regulatory authority to attack media organizations that he finds objectionable in order to silence them," they said.

Pallone and Raskin demanded that Skydance produce by Sept. 3 any settlement between Skydance or Paramount and Trump, details about any PSAs or other programming offered to Trump, and all communications between the companies and the White House about the proposed merger. They also demanded a detailed description of conversations Ellison had with Trump on April 12 and July 7; all internal company communications and documentation about settlement terms and side agreements; and all communications between the companies and anyone at the FCC related to the merger that refer to Trump's CBS lawsuit and the FCC's news distortion investigation.

"The letter asks important questions on the propriety of the Paramount Global-Skydance merger, including the behind-the-scene pressures exerted on Paramount, the connection to the settlement of the frivolous Texas litigation over 60 Minutes, and what conditions were promised to secure the merger's approval," emailed the Foundation for Individual Rights and Expression’s Robert Corn-Revere, a former FCC chief of staff. "The inquiry is not as unprecedented as are the regulatory manipulations that led to it. Hopefully, the inquiry will help shed light on what appear to be serious abuses of power."

Feld told us it's not unheard of for there to be allegations of White House interference in a merger, but they usually have little practical effect. There's a narrow window in which the FCC's approval can be challenged in federal court, he noted.

In addition, even if there was solid evidence of bribery by the companies in exchange for regulatory approval, that wouldn't necessarily make the FCC-approved license transfer itself illegal, he said. Though a company paying a bribe would be evidence that it doesn't meet the character requirement to hold an FCC license, it would be hard for the agency to argue against a company's unworthiness because it caved to the commission, Feld said.