Paramount Offers to Sell CNN as Bargaining Chip to Resolve State Antitrust Lawsuit

The long-stalled $110 billion merger between Paramount Skydance and Warner Bros. Discovery has escalated into a high-stakes standoff between Hollywood executives and state regulators. In a bid to clear the final regulatory hurdle blocking the acquisition, Paramount's chief legal officer, Makan Delrahim, publicly stated that the sale of CNN is "on the table" as a potential concession. The offer marks the clearest signal yet that Paramount views the iconic cable news network as a negotiable asset if divesting it ensures the broader transaction survives. The public admission shifts the dynamic of the negotiations, demonstrating that the studio is willing to sacrifice a marquee brand to appease state-level antitrust concerns.[1][6]

The proposed megadeal has already secured antitrust clearance from the U.S. Department of Justice, as well as regulators in the European Union, the United Kingdom, and China. However, a coalition of 12 states, led by California Attorney General Rob Bonta, filed a lawsuit in July to block the merger. The states argue that combining two of the country's largest film and television studios would unlawfully concentrate market power. According to the lawsuit, the consolidation would lead to higher prices for consumers and reduced competition across the theatrical film and cable television industries, effectively creating an unchecked media behemoth.[3][6]

The pressure to finalize the deal is mounting rapidly for Paramount's leadership. Under the terms of the acquisition agreement, Paramount faces a staggering $7 million-per-day penalty if the transaction is not completed by October 1. With a federal judge recently setting a trial date for March 2027, the company is staring down the prospect of hundreds of millions of dollars in ticking fees unless a settlement can be reached before the deadline. The financial strain of the delay has forced executives to aggressively seek alternative paths to bypass the litigation and close the merger.[2][4]

In an effort to force a resolution, Paramount CEO David Ellison has reportedly threatened to relocate the company's operations out of California entirely. During a recent meeting with his executive leadership team, Ellison indicated that if Bonta refuses to negotiate a settlement, he will move either standalone Paramount or the combined entity to a state with a more favorable regulatory and tax environment, such as Tennessee, Texas, or Georgia. Delrahim echoed this sentiment, framing a potential exit as a "fiduciary duty to shareholders" that could save the company $500 million annually in state taxes.[2][6]

The prospect of losing one of Hollywood's historic studios—and the estimated 30,000 jobs tied to its Southern California operations—has sent ripples through the local economy. Economic development officials in other states have already signaled their willingness to welcome the entertainment giant. Representatives in Georgia, which boasts extensive soundstages and a lower tax burden, noted their "long-term relationships with our industry partners" when asked about a potential Paramount relocation. The threat leverages California's reliance on the entertainment industry, attempting to pit the state's economic interests against its antitrust enforcement priorities.[2][7]

California regulators have flatly rejected the relocation threats. Speaking at a political summit in Sacramento, Bonta described Ellison's maneuvering as a desperate tactic. "I call it blackmail now," Bonta stated, accusing Paramount of attempting to pressure regulators who are "daring to enforce the law fairly and firmly." He characterized the state's challenge as a straightforward antitrust case aimed at preventing an illegal consolidation of power. Bonta emphasized that the state will not be intimidated into dropping a lawsuit that protects consumers from monopolistic practices.[3][5]

Bonta also dismissed the notion that divesting CNN would be sufficient to resolve the states' concerns. While Paramount executives have previously suggested the lawsuit was politically motivated by fears over CNN's editorial independence under new ownership, Bonta clarified that the news network is not the core issue. "A divestiture of CNN, a spinoff of CNN, a structural remedy that just applies to CNN will never, ever, ever, ever, ever resolve this case," Bonta said. He reiterated that the lawsuit focuses on the broader theatrical and cable television markets, which would remain highly concentrated even without CNN.[2][4][5]

The public posturing over CNN has also generated internal friction within Paramount. Shortly after Delrahim's comments made headlines, unnamed Paramount sources pushed back, insisting that there is "zero truth" to the idea that Ellison is actually prepared to sell the network. These insiders suggested that the chief legal officer's remarks were merely a negotiating tactic intended to convey a willingness to talk, rather than a concrete plan to unload the asset. The conflicting statements reveal a company struggling to present a unified front as it navigates the high-stakes legal battle.[2][4]

The conflicting narratives highlight the complex dual-track strategy Paramount is employing. On one hand, the company is signaling to regulators that it is willing to make structural concessions to save the merger. On the other, it is attempting to reassure its own employees and investors that it remains committed to integrating Warner Bros. Discovery's marquee brands, including CNN, into its portfolio. This balancing act aims to keep all options open while applying maximum pressure on California regulators to settle the case out of court.[1][4]

As the October deadline approaches, the standoff underscores a shifting landscape in corporate mergers. Companies have traditionally viewed federal antitrust clearance as the definitive finish line for megadeals. However, the aggressive intervention by state attorneys general demonstrates that regional regulators are increasingly willing to act as independent gatekeepers. By forcing a massive corporation to consider divesting a major asset or relocating its headquarters, the 12-state coalition has proven that state-level antitrust suits can effectively stall, and potentially reshape, the largest transactions in the media industry.[1]