David Ellison, the CEO of Paramount, has been sued in his pursuit of acquiring Warner Bros. The latest development comes after the two companies’ merger was sued by 12 states over regulatory concerns.
Why is Paramount’s David Ellison being sued?
David Ellison and his brother, Larry Ellison, are being sued by Paramount investors for allegedly making side deals with Donald Trump related to the merger (via The Hollywood Reporter). The lawsuit, which was filed in Delaware Chancery Court, seems to be over the investors’ claim about Ellison’s promises to do a complete overhaul of CNN if Trump lets the merger happen. The investors also allege that Ellison promised up to $20 million in free advertising and a $16 million payment to Trump through a prior settlement for resolving an alleged lawsuit he had filed against CBS.
The investors also alleged that Trump helped Paramount in winning the bidding war over the acquisition of Warner Bros. Discovery. “After receiving regulatory approval, the Ellisons proceeded to remake CBS in the President’s image, bought properties he enjoyed, and even hosted events to honor him,” wrote Mary Thomas, a lawyer for the investor. “This helped the Ellisons, but it appears to have hurt Paramount and its media outlets.”
Earlier in July, one of CNN’s top correspondents left the company, citing concerns over the company’s “new future under different corporate management,” referring to the Paramount takeover. The lawsuit, filed by Paul Robbins on behalf of Paramount shareholders, argues that Ellison’s alleged violations are “per se breaches of the duty of loyalty and also create enormous financial and legal risk for Paramount.”
According to a previous lawsuit, if the merger is successful, the combined company will control more than 30% of wide-release big-budget theatrical films. The merger has faced several roadblocks, including a lawsuit from the Writers Guild of America, which argues that the deal would leave fewer companies competing to buy scripts from working writers. Earlier this week, Cinema United and other movie theater organizations also backed the WGA’s lawsuit against the merger.
