President Trump on Wednesday further inserted himself into the drama around the sale of Warner Bros. Discovery, saying he believes CNN — one of several cable networks owned by WBD — should be sold as part of any deal.
Why it matters: While the president doesn't have the power to unilaterally block a merger he doesn't like — unless there are serious national security concerns pertaining to foreign investments — his comments do have the ability to sway the decisions of WBD shareholders and its board.
State of play: WBD' s board has 10 days to respond to a hostile takeover bid from Paramount, launched Monday after WBD announced a deal to sell its studio and streaming businesses to Netflix for $83 billion.
- While the board has said it believes Netflix's offer was superior to Paramount's for financial reasons, it will need to weigh whether choosing to reject Paramount's tender offer could invite shareholder lawsuits.
- Paramount's pitch to shareholders isn't just that its bid is better financially, but that it's more likely to receive regulatory approval than Netflix's offer. Paramount has offered $108 billion to buy all of WBD, including its cable networks.
The intrigue: Until Trump's comments Wednesday, Paramount argued Netflix's bid faced more regulatory scrutiny because of its subscription streaming dominance.
- Now, Trump's comments could be used to persuade shareholders that Netflix's bid faces regulatory risks because it doesn't include the acquisition of WBD's cable networks, including CNN.
What they're saying: In a press briefing Wednesday, Trump said he will "probably be involved" in the WBD deal decision, and that it's "imperative" that CNN be sold as part of any deal, so that its owners can't "spend even more money spreading poison because it's lies."
- "I wouldn't want to see the same company end up with CNN," he said. "Because I think the people that are running CNN right now are either corrupt or incompetent (with) decision-making."
- "I don't think the people that are running that company right now and running CNN — which is a very dishonest group of people — I don't think that should be allowed to continue. I think CNN should be sold along with everything."
Zoom out: Both Paramount and Netflix have waged aggressively lobbying campaigns to try to curry favor with Trump and his administration.
- WBD's board, meanwhile, has indicated that it believes its deal with Netflix will ultimately get approved.
What to watch: While Paramount has focused much of its lobbying efforts on conservatives, Democrats say they have concerns about the foreign investors backing its offer.
- In a securities filing Monday, Paramount said its outside financing partners include the Kingdom of Saudi Arabia's Public Investment Fund, Abu Dhabi's L'imad Holding Company, the Qatar Investment Authority (Qatar) and Jared Kushner's Affinity Partners.
- Those entities, which are collectively putting up at least $24 billion, have agreed to forgo board seats and voting rights as a part of their participation in the bid, so as not to cross any foreign investment thresholds that might trigger further regulatory scrutiny.
Disclosure: The author is a paid contributor for CNN.
