A fourth lawsuit has been filed to block Paramount’s proposed $110 billion acquisition of Warner Bros. Discovery, with shareholders accusing David Ellison and his father, Oracle founder Larry Ellison, of orchestrating an illegal side deal with President Trump to secure regulatory approval for the merger. The lawsuit, filed Tuesday in Delaware Chancery Court, alleges that the Ellisons promised to implement sweeping changes at CNN—a cable news network frequently criticized by the President—to align it with the administration’s views. Investors claim this “corrupt” arrangement was never disclosed to shareholders, creating significant legal and financial risks for the company.
Allegations of Quid Pro Quo and Fiduciary Breach
According to the complaint, the alleged deal included promises of $20 million in free advertising for President Trump and a $16 million payment to him stemming from a prior settlement by the studio’s previous ownership regarding a lawsuit against CBS. Shareholders argue that the Ellisons’ actions constitute a breach of fiduciary duty by exposing Paramount to long-term legal and political liability. “The Ellisons’ actions not only harm the reputations of the news outlets they currently own, which are hemorrhaging viewers, but they are latent liabilities waiting to be triggered by a future administration,” the complaint states. Mary Thomas, a lawyer for the investors, wrote in the filing that while the alleged efforts to “remake CBS in the President’s image” may have benefited the Ellisons, they have damaged Paramount’s media outlets, contributing to a talent exodus and record-low ratings at CBS News.
A Growing Legal Front Against the Merger
The shareholder lawsuit joins a mounting list of legal challenges attempting to halt the Paramount-Warner Bros. Discovery transaction. Earlier this week, a coalition of 12 state attorneys general, led by California Attorney General Rob Bonta, filed a federal antitrust lawsuit to block the deal. They argue the merger would violate the Clayton Antitrust Act by consolidating power in the film, television, and streaming markets, potentially forcing higher prices on consumers and reducing competition. Additionally, the Writers Guild of America (WGA) has filed a lawsuit in federal court to stop the merger, citing concerns over potential job losses and reduced pay for writers. Furthermore, the Freedom of the Press Foundation, which holds shares in Paramount, is demanding that the Ellisons produce records regarding the acquisition to investigate whether favors were traded with the Trump administration.
For more on this story, see States Sue to Block $111B Paramount-Warner Bros. Merger Over Hollywood Competition Risks.
Paramount’s Defense and Procedural Battles
Paramount has maintained that the states’ antitrust lawsuit is based on a “fundamentally flawed application of the antitrust laws.” In a statement, the company argued that the legal challenge “distorts settled antitrust law and is based on a misrepresentation of competition in the entertainment industry today.” As the merger faces these hurdles, Paramount is simultaneously engaged in a procedural dispute. The company’s legal team has filed a motion to recuse U.S. District Judge P. Casey Pitts from the state attorneys general case. Paramount argues that Judge Pitts, who was appointed by President Joe Biden in 2023, has an “appearance of bias” due to his former role as labor counsel for the WGA, which is an active opponent of the merger. Paramount has requested that the case be reassigned to Judge Araceli Martínez-Olguín.
High Stakes for the Media Colossus
The proposed merger is central to David Ellison’s ambition to build a major Hollywood empire. The deal, valued at approximately $111 billion, would unite one of the oldest film studios with a vast portfolio of assets, including HBO, CNN, and the Burbank studios behind franchises like *Batman*, *Superman*, and *Harry Potter*. Failure to close the deal by next summer could trigger a $7 billion payment from Paramount to Warner Bros. Discovery. Furthermore, David Ellison reportedly aims to finalize the acquisition by September to mitigate escalating legal fees and avoid increased payouts to shareholders. FCC Chair Brendan Carr noted reports that California might consider dropping its antitrust litigation if the deal included a spin-off of CNN, though he expressed skepticism regarding the legal theory behind the state’s challenge. For now, the future of the merger remains tied to the outcome of these multiple, simultaneous legal actions.
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