A prolonged FCC review against a backdrop of President Donald Trump’s lawsuit is fueling speculation that a Paramount–Skydance marriage might be heading for the rocks.In a note Wednesday, analyst Rich Greenfield of LightShed Partners voiced what others have started to wonder, saying he’s “increasingly concerned the deal could collapse as Paramount is paralyzed by legal fears surrounding the pending President Trump-CBS 60 Minutes lawsuit.”The proposed merger announced last summer carried several automatic 90-day extensions. If it doesn’t close by July 7 that will trigger another round through early October. Greenfield believes the parties will walk away if it’s not done by then. A $400 million breakup fee would not apply in that case since FCC approval was a condition of the deal.Trump sued Paramount’s CBS for $20 billion for its editing of excerpts of an interview with then-presidential candidate Kamala Harris, and there’s been mediation but no settlement so far. Meanwhile, politicians in Washington D.C. and California and a public interest group warned Paramount’s controlling shareholder Shari Redstone that if the company does settle, it might be construed as a bribe as it waits for deal approval. “We believe it is unlikely the FCC will weigh in until the current Trump/CBS lawsuit is resolved,” said Greenfield.However, now “it appears quite clear that Paramount’s Board of Directors and senior executives are concerned about personal liability tied to signing off on a Trump settlement,” he said. He noted that Par’s trio of new directors announced this week included respected litigator Mary Boies, wife of legal titan David Boies.Hollywood has been rooting for David Ellison’s Skydance, and there’s been a sense among investors that the deal ultimately would close given his father and financial backer and billionaire Oracle co-founder Larry Ellison’s close relationship with Donald Trump. Paramount recently affirmed that it expected the deal close in the first half. That said, it just set its annual meeting for early July.The ligation is messy. Sen. Elizabeth Warren (D-MA), Sen. Bernie Sanders (I-VT) and Sen. Ron Wyden (D-OR) warned Redstone in a letter that a potential settlement might violate federal bribery laws. The heads of the California State Senate Energy, Utilities & Communications Committee and the Senate Judiciary Committee in Sacramento, Sens. Josh Becker and Thomas J. Umberg, informed Redstone and Paramount’s board that they began an investigation to see if Golden State bribery and unfair competition laws are about to be violated. And nonprofit group Freedom of the Press said it intends to sue Paramount if it settles, saying corporations that own news outlets. “should not be in the business” of settling “baseless lawsuits that clearly violate the First Amendment and put other media outlets at risk.”Redstone controls Paramount through family holding company National Amusements, which also owns the National Amusements movie theaters and has been in a years-long struggle to service its debt. As Greenfield pointed out, merchant bank BDT Capital Partners and the Ellison family have lent NAI close to $400 million. It’s not clear what the repayment timing and terms to the Ellisons is or would be if the deal falls apart.One Wall Streeter noted that NAI has some assets, including its Paramount stock and land around many of its theaters, though it has sold some.Reps for Paramount and NAI declined to comment.“We all want David in there,” this person said, “but the longer it takes for him to get in there and make changes, it’s not good for either company.”
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