--:-- Ryan Knutson: Welcome to The Journal, our show about money, business, and power. I'm Ryan Knutson.
--:-- Jessica Mendoza: I'm Jessica Mendoza. It's Thursday, February 27th.
--:-- Ryan Knutson: Coming up on the show, Trump's fight against the news media runs headlong into a massive entertainment merger.
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--:-- Ryan Knutson: Soon after 60 Minutes aired its interview with Harris, Her opponent, Donald Trump, took to the stage at a campaign rally and asked his supporters a question. So, you know what? If you want me to, I will sue them. Should I? Because they are among the most, see the media? They're among the most dishonest people that we have.
--:-- Jessica Mendoza: Trump did sue CBS for $10 billion. And our colleague Jessica Tunkel has been following the case.
--:-- Ryan Knutson: So Trump files this massive lawsuit. And, you know, frankly, at the time, I'm not sure everyone took it super seriously because they felt like it was grandstanding. But in the claim, what he says is that there was a promotion for the interview on Face the Nation. Face the Nation is another CBS show, and it aired a preview of the interview. And then when you actually saw the interview, it was much more — it was a cleaner answer. It was a more succinct answer.
--:-- Jessica Mendoza: Here is Harris answer as it aired on Face the Nation. But it seems that Prime Minister Netanyahu is not listening. Well, Bill, the work that we have done has resulted in a number of movements in that region by Israel that were very much prompted by or a result of many things, including our advocacy for what needs to happen in the region.
--:-- Ryan Knutson: And here's what aired on 60 Minutes. We are not going to stop pursuing what is necessary for the United States to be clear about where we stand on the need for this war to end.
--:-- Jessica Mendoza: When you actually saw the interview on 60 Minutes, it was a much more succinct answer. And so Trump is saying this was deceitful. You did this to favor her campaign over mine.
--:-- Ryan Knutson: How did CBS respond? So CBS was pretty vehement. They said, you know, it's the same question. Same answer, different portions of the response. And this is a frivolous lawsuit.
--:-- Jessica Mendoza: And like sort of stepping back in media generally, what is best practice when it comes to this kind of editing? I think the best practice is to make sure that whatever the promotion is, is in line with what the answer was on the interview.
--:-- Ryan Knutson: I want to clarify that 60 Minutes is unusual in that it is like an hour's worth of footage that they like cut down to 21 minutes. So there is an expectation there's going to be a lot of editing of that interview.
--:-- Jessica Mendoza: But sources have told me that since this happened, they are going to be more rigid about making sure that it's exactly the same language that's used in promotions.
--:-- Ryan Knutson: And I would say that this is a tricky area in media, editing politicians. Yes, this is a complete minefield. It's damned if you do, damned if you don't, you know, because they do so much editing to get a longer interview down to just around 20 minutes. It's tricky.
--:-- Jessica Mendoza: After Trump won the election, several companies that he sued announced settlements. In December, ABC said it would pay Trump $15 million to settle a defamation lawsuit. The case involved an inaccurate statement by anchor George Stephanopoulos about a sexual abuse case against Trump.
--:-- Ryan Knutson: In January, Metta settled a case over Trump's suspension on Instagram and Facebook, paying him $25 million. X also settled a similar case for $10 million.
--:-- Jessica Mendoza: So since then, it felt like CBS was not publicly as vehement in its outrage over the lawsuit. And they've been going back and forth in court.
--:-- Ryan Knutson: Trump recently, a few weeks ago, amended his complaint to increase the amount to $20 billion. $20 billion?
--:-- Jessica Mendoza: Yes. What have legal experts said are the chances that Trump's lawsuit would succeed in court?
--:-- Ryan Knutson: So it kind of depends who you talk to. I will say that First Amendment attorneys say this is completely frivolous and ridiculous. And that has no standing.
--:-- Jessica Mendoza: I mean, you know, when I talk to sources close to Paramount, I think the concern is even if they were to win this ultimately, it could mean years in court battling the president of the United States. Could be hundreds of millions of dollars.
--:-- Ryan Knutson: And what would it mean for CBS News then? And if they choose to settle, What do legal experts say that would show?
--:-- Jessica Mendoza: I think if they choose to settle, the concern is that all news outlets are sort of at the whims of the president of the United States. And if he feels like what is being said is unfair or not accurate, regardless of whether it is or not, they could risk litigation.
--:-- Ryan Knutson: So it does feel like we are entering this era of media versus the president. But in the case of CBS, there's this other layer.
--:-- Jessica Mendoza: In the case of CBS, they have to get this merger done. This merger. CBS parent company Paramount is trying to get an $8 billion merger completed.
--:-- Ryan Knutson: But first it needs approval from the Federal Communications Commission which is now run by a Trump appointee.
--:-- Jessica Mendoza: That after the break.
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--:-- Ryan Knutson: Paramount is a huge media conglomerate. It not only owns CBS, it also owns Showtime, Paramount Pictures, and its own streaming platform. And the company has been struggling for years.
--:-- Jessica Mendoza: Long before the Harris interview aired, Paramount's owners had started merger talks with a production company called Skydance. The controlling shareholder Sherry Redstone did not want to sell. She had a lot of belief that the company could turn around until finally in comes David Ellison, who runs his own production company, which is much smaller than Paramount, by the way. But his father is Larry Ellison, who's a billionaire. He has this vision of taking tech and, you know, making Paramount a new media company. And he has billions of dollars to back it up.
--:-- Ryan Knutson: David Ellison and Skydance seemed like a perfect suitor for Paramount and Sherry Redstone. But talks dragged on for more than a year. And there were ups and there were downs. You know, the deal was canceled, then it was back on, then it was off, then it was on. And then you had other suitors coming in and saying they wanted to buy Paramount. I mean, it was very dramatic. You really didn't know until the very end if this deal was actually going to be announced.
--:-- Jessica Mendoza: The deal was announced last summer. But to be finalized, it needed government approval, specifically the FCC. All my sources were telling me this is just going to fly through. Like, the election will happen and it will fly through because people at that point were thinking Trump was going to win and that the deal would happen. That is not what happened.
--:-- Ryan Knutson: What's holding up the deal at this moment? So that is not what has happened. And what's holding up the deal primarily is this concern around bias at CBS News.
--:-- Jessica Mendoza: So the FCC has first said, we want to see the transcript of the interview with Kamala Harris. We want to see the raw footage and we want to review all of that.
--:-- Ryan Knutson: The FCC also reopened a third party complaint against CBS News about bias, which the Biden administration had tossed out.
--:-- Jessica Mendoza: So the FCC has made it very clear that this is a focus for them. They are reviewing bias at CBS News as part of their review. And that is totally separate from the Trump lawsuit.
--:-- Ryan Knutson: On paper, that is totally separate. There are separate filings, a separate docket for the FCC review than from Donald Trump's personal lawsuit.
--:-- Jessica Mendoza: So whether Paramount settles with Trump should not have any impact on the FCC review. Theoretically, it should not have any impact. If there is a settlement, it should not impact the FCC review.
--:-- Ryan Knutson: Is that unusual for the FCC, the Federal Communications Commission, to bring up the idea of bias as part of a merger review?
--:-- Jessica Mendoza: I do not recall a time when you've seen the FCC look at this issue of bias. The FCC usually looks at the stations and like whether two companies if you put them together they own too many stations and that will be an issue I recall a time where I seen bias be this much of an issue with the FCC and a merger.
--:-- Ryan Knutson: And what about people inside Paramount? How are they thinking about all of this?
--:-- Jessica Mendoza: We had heard that there were discussions internally at Paramount to settle the lawsuit. And that has caused a lot of controversy within Paramount, within CBS News, specifically within 60 Minutes, because you have journalists and executives at the company who do not want to settle, who think it's a terrible precedent.
--:-- Ryan Knutson: And you have a controlling shareholder, Sherry Redstone, who is starting to see that the only option to not be in litigation for the next several years is by settling this lawsuit.
--:-- Jessica Mendoza: Since CBS and Paramount have been so vehement that this case is frivolous, if they do settle, could it be interpreted as a quid pro quo for approval for the merger?
--:-- Ryan Knutson: Well, that's the concern. The concern is if the settlement is viewed as a quid pro quo for getting the merger approved, that these executives could then be sued for bribing a public official.
--:-- Jessica Mendoza: I reported a few weeks ago that one major concern among executives at Paramount is if Paramount settles this lawsuit and then a few weeks later or whenever the FCC and the other regulators approved this deal with Skydance, some state attorney general could file criminal charges for bribing a public official. I've heard people talk about jail time.
--:-- Ryan Knutson: A spokesperson for Paramount Global said, quote, This lawsuit is completely separate from and unrelated to the Skydance transaction and the FCC approval process. We will abide by the legal process to defend our case.
--:-- Jessica Mendoza: And what has Skydance said?
--:-- Ryan Knutson: Skydance has not said anything publicly. Skydance does not own Paramount, so they really technically can't get involved in any of this.
--:-- Jessica Mendoza: Would Skydance go ahead with the deal if the Trump lawsuit is still out there?
--:-- Ryan Knutson: So sources have told me that Skydance wants Paramount to get rid of this before they buy the company. They don't want to deal with this.
--:-- Jessica Mendoza: And yesterday, there was an indication that a deal could be in the works. Trump told reporters that settlement talks are underway in his case against CBS.
--:-- Ryan Knutson: When you look at this, do you think it's more of a media story or a business story or a politics story? Everything is so intertwined.
--:-- Jessica Mendoza: You know, I think it's all three of those things. It is a media story, obviously, because of the precedent it could set and because of the controversy within news organizations. Around the globe, people have very strong feelings about whether Paramount should settle or not.
--:-- Ryan Knutson: I think it's a business story because you have Paramount, which is in the middle of this merger with Skydance Media. And that merger in and of itself has been through many, many iterations and challenges.
--:-- Jessica Mendoza: And then you have it as a politics story because of the Trump of it all, of course.
--:-- Ryan Knutson: That's all for today, Thursday, February 27th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Joe Flint and Drew Fitzgerald. Thanks for listening. See you tomorrow.
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