Paramount shareholder sues Ellisons over alleged Trump deal tied to Warner Bros. Discovery merger

A Paramount shareholder filed a derivative lawsuit in Delaware Chancery Court on Tuesday seeking to block the $111 billion merger between Paramount and Warner Bros. Discovery and to obtain unspecified monetary damages. The complaint alleges that David Ellison, CEO of Paramount Skydance, and his father Larry Ellison arranged an undisclosed agreement with President Donald Trump that provided "illegal private benefits" to the former president in exchange for removing regulatory obstacles to the transaction. According to the filing, the alleged side deal would have allowed cash to be funneled to Trump by settling his legal claims against CNN and included promises to dismiss certain CNN anchors after the merger.

The suit was filed a day after a coalition of 12 Democratic state attorneys general and the Writers Guild of America launched separate antitrust challenges to the merger, arguing it would give the combined company excessive control over theatrical and cable-TV markets. Paramount responded that the allegations have been previously reported and addressed, and that no commitments have been made to any government body regarding the future of CNN or other news properties. The company said the merger would increase consumer choice, boost investment in original programming, and strengthen journalism and storytelling.

Paramount’s merger received approval from the U.S. Justice Department in mid-June without conditions, despite internal objections from some DOJ staff. The complaint notes that federal regulators did not appear to scrutinize the deal through the Committee on Foreign Investment in the United States, even though Paramount secured $24 billion from sovereign wealth funds of Saudi Arabia, Qatar and the United Arab Emirates, which would own 38.5% of the combined entity without board seats or voting rights.

Lead plaintiff Paul Robbins, a long-time Paramount shareholder, is represented by attorneys from the Public Integrity Project and the Freedom of the Press Foundation. In a statement, the Freedom of the Press Foundation’s chief of advocacy said the merger’s economic terms are unfavorable to shareholders and raised concerns about alleged commitments to influence CNN’s coverage. The Public Integrity Project’s CEO described the case as an effort to expose potential violations of fiduciary duty and corporate law.

The lawsuit also names several Paramount Skydance board members as defendants, alleging they failed to uphold their fiduciary duties by allowing the merger to proceed under the purported arrangement.