Yesterday I was reading this piece from Status about the agreement between Paramount and the states suing the company on anti-trust grounds to halt the Time Warner merger for up to a year. (The piece is paywalled. But I think you can read it without a subscription by giving them your email.) Reporter Natalie Korach spoke to a handful of antitrust experts to evaluate what this agreed upon delay means, who it’s good or bad for and what it means for the future of the merger deal itself.
She didn’t find unanimity on the outlook. But the weight of opinion was definitely along the lines of this being not at all good news for Paramount or the merger. The Ellisons seem to have thought that buying off the Trump administration (largely in the form of promised friendly coverage and the destruction of CNN) was enough, and that any state lawsuits would be tossed aside by judges. Agreeing to this deal, according to most of these experts, was simply the least bad option Paramount had out of a field of bad options. Now the deal itself is in real danger. And it’s in danger not necessarily because Paramount will lose eventually on the merits but because mergers are a bit like sharks. They have to keep moving forward to survive. Delay makes everything harder — investors get skittish, synergies get more iffy, you have a longer period trying to work with people who might end up being colleagues or corporate competitors.
In any case, I was gratified to hear this because this deal is crooked and bad by really every possible measure. If you’re willing to give Status your email, I’d recommend reading the piece because the details and nuances of the responses from antitrust experts are interesting and telling. But my point here isn’t to game that out or predict the future. As at least one expert put it, you have to weigh into this equation that Paramount seems to want this deal for more than purely financial reasons. They may be more committed to the detail than your average corporate behemoth because this is a) building a media juggernaut on the fly with dad’s money and b) operating on more pronounced ideological motives than usual. But what I really want to focus on is the role of the states.
States banding together for major lawsuits is not new. It’s something attorneys general often do. The 1998 Big Tobacco settlement is a key example. And it is relevant to our current moment inasmuch as the states ending up playing a role because the federal government would not. There was a growing national consensus but reform was blocked at the federal level. So there’s some analog here to the extent that the story in this case is that the federal government was corrupt and could be bought off, but Paramount apparently didn’t give enough thought to the existence of other sovereigns who could do what the federal government refused to.
So no, this isn’t a totally new thing under the sun. But it is an example to be emulated, built upon, brainstormed upon. As we’ve discussed, while federal law is supreme, the states are also sovereign powers and they wield executive power. There are numerous gaps and lacunae where federal and state authority are on fairly equal terms. This is an example of working through the courts. But there are many others where states have the power of non-compliance or competing sovereign powers. Critically, much of President Trump’s current corruption is based on the simple refusal to act. Numerous laws are simply not being enforced. And since they’re not enforced, the laws might as well not exist. But that is more a refusal to act than any ability to make criminals immune or overturn the laws themselves. And the power of that refusal diminishes greatly if there is another sovereign authority which can act on its own. In many cases, states can do just that, either individually or as a group.
