Paramount’s Makan Delrahim Says “Everything Is On The Table” In Finding Merger Resolution, Says Leaving California Is A Consideration But Not “Blackmail”

Paramount‘s Chief Legal Officer Makan Delrahim said that “everything is on the table” when it comes to finding a resolution to a state attorneys general lawsuit seeking to block the company’s proposed merger with Warner Bros. Discovery.

At a Politico conference on Tuesday, Delrahim also defended the company’s consideration of exiting California. California Attorney General Rob Bonta, who is leading the state AGs lawsuit and appeared at the same conference hours earlier, called the threat to leave a form of “blackmail.”

“David Ellison was born here, lived here since I moved to this country. I’ve lived here. He’s raising his children here. His intent is to be committed to be in California,” Delrahim said. He added, “There’s a point at which where you have a duty, a fiduciary duty to your shareholders, and those are all the factors you consider. But our goal is to be here.”

Delrahim said, “I heard the attorney general say that this was some kind of blackmail attempt for the lawsuit. It is not. When the delay starts costing you know after this merger has been approved from, I believe, 67 countries — European Union, China. Canada, Australia — let’s forget about the DOJ — but all of them have reviewed it this way. But this state seems to view this merger in a different market. You have to take a look at the business environment and look to see what’s best for not only the community, the business, and ultimately, go to the place where you are wanted.”

Ellison told a group of the company’s executives that he would start the process of leaving the state around Oct. 1 if Bonta did not negotiate a settlement. Paramount faces paying a $7 million-per-day ticking fee to Warner Bros. Discovery for each day that the merger doesn’t close past Sept. 30. But a federal judge last week set the trial for next March, scuttling the company’s plans to close the deal as soon as this summer.

California and 11 other states sued to block the merger last month, claiming that it would stifle competition for wide release theatrical film distribution, anticipated big budget blockbusters, and basic cable television channel licensing.

With the prospect of a trial delaying the transaction well into next year, Paramount has waged a PR campaign to try to show that the deal has drawn industry support, while Ellison has tried to peg the state AG opposition as about concerns over what would happen to CNN, amid warnings that he would push the network in a Trump-friendlier direction. In a new York Times op ed, Ellison wrote that news organizations require independence, while he said that CNN and CBS News, which Paramount already owns, “are here to tell it straight down the middle.”

Delrahim pointed to the Ellison op ed, and said that when it came to CNN, the CEO “wants to bring it back to news.”

Bonta, though, denied that the lawsuit was about control of the network, and a mere divestment of the channel would not be a sufficient structural remedy to satisfy the state AGs.

Delrahim told the Politico conference, “I take [Bonta] at his word. It’s not about CNN.This is an antitrust case. He’s trying to protect movie theaters and cable operators, as alleged in the lawsuit.”

But Delrahim predicted that the AGs would not have a viable case at trial. He pointed to support for the merger from major exhibitors, and when it came to the merger’s impact on cable operators, “it will fall apart because of the market definition.”

“There is no such thing as basic cable anymore,” he said. “Combined, if you look at streaming, the two companies will have something like 7% to 11% of the market share.”

When Politico’s Alex Burns pressed him on the prospect of selling CNN as a way to “make it easier to get this deal done,” Delrahim responded, “I was born in Iran. I moved here after the 1979 revolution. The single most important thing we have is the First Amendment. not because I’m a religious minority and …think people should be free, but also the First Amendment and free speech. If you start using state powers and wrap yourself around that to actually violate the First Amendment and control of content, that would be the saddest day in this country.”

He added, “But having said that, everything is on the table. We would be delighted to engage and discuss about any resolution to get this merger, to get this closing after all this time, in order to repair the industry, create more jobs, bring more jobs and production back.”

Delrahim also was asked about the prospect that the company would be investigated by Democrats if they take control of one or more chambers of Congress in the midterms. Rep. Jamie Raskin (D-MD), the ranking member of the House Judiciary Committee, and other Democrats have warned that Paramount would face scrutiny along with other big mergers and efforts to win support from the Trump administration.

“You can allege all you want,” Delrahim said. “There is no corruption here.”