Paramount executives ask: Could they be sued for settling Trump’s $US20bn CBS lawsuit?

Media company executives fear liability from potential settlement paid before Skydance merger.

Donald Trump’s lawsuit against CBS alleges the network committed election interference by favourably editing portions of an interview with Kamala Harris. Picture: Getty Images

Paramount Global is wrestling with whether or not to settle US President Donald Trump’s lawsuit against its CBS News unit, and how it might do so without exposing executives to future legal threats, such as accusations of bribery.

In recent weeks, company executives talked about the risk that paying such a settlement could expose directors and officers to liability in potential future shareholder litigation or criminal charges for bribing a public official, people familiar with the conversations said. Some executives had reportedly expressed an additional concern that such litigation might not be protected by director and officer insurance, some of the people with knowledge of the discussions said.

Paramount is awaiting regulatory approval for its merger with Skydance Media. Some executives had flagged the potential risk that if the company settled and the deal was approved in short order, the payment could be construed as a bribe, the people familiar with the matter said.

Some executives involved in the merger reportedly believed settling the lawsuit, which is focused on how CBS edited a 60 Minutes interview with former vice-president Kamala Harris, was a way to alleviate tensions with the Trump administration. However, At Paramount, some executives opposed a settlement and the precedent it might establish.

People involved in the merger floated the possibility of Larry Ellison, who is close to Mr Trump, and is the father of Skydance owner David Ellison, negotiating a deal with the administration that would allow the merger to go through in the near term, some of the people familiar with the discussions said.

A person close to the Ellisons said they were hesitant to close the deal with Paramount unless a settlement was reached.

The lawsuit focuses on how CBS edited a ‘60 Minutes’ interview with former vice-president Kamala Harris. Picture: Getty Images

The Paramount-Skydance deal cleared other regulatory hurdles. On Thursday, the Securities and Exchange Commission approved Paramount’s information statement in connection to its registration filing for the merger, a key disclosure for investors.

The European Commission also approved the proposed merger this week.

Mr Trump’s lawsuit and the regulatory review of Paramount’s merger with Skydance are proceeding on different tracks.

Federal Communications Commission chairman Brendan Carr said a third-party news distortion complaint about the way 60 Minutes edited the Harris interview could factor into the agency’s review of the merger. The FCC has authority over the Paramount-Skydance deal because it would involve the transfer of broadcast television licences held by CBS. Based on the third-party complaint, Mr Carr was pursuing an inquiry into how CBS News handled the interview edit and ­demanded the company release the full transcript and raw footage, as part of the agency’s review of the merger.

CBS last week published a full transcript of the Harris interview and said it showed the broadcast wasn’t doctored or deceitful.

Mr Trump’s lawsuit against CBS alleges the network committed election interference by favourably editing portions of an interview with Harris, giving her an edge in her presidential campaign. He recently amended the suit to seek $US20bn in damages, up from $US10bn.

The President alleges that CBS aired one version of the interview on 60 Minutes and another version on its show Face the Nation, each containing different answers about Israel.

CBS said it aired a more succinct version of Harris’s interview on 60 Minutes.

Insurance policies for company directors and officers typically cover legal costs for individuals accused of “bad acts,” such as criminal acts or bribery, unless they are found guilty or liable ultimately, said Bill Passannante, co-chair of the insurance recovery group at Anderson Kill. This would be the case for both criminal charges and civil shareholder lawsuits.

Still, he said, there was always the risk of an “unusual unicorn” case – in which the directors and officers are found liable or guilty in a final appeal, and thus are not covered.

The consideration is different for Paramount than some other companies where there wasn’t a pending deal.

Disney in December settled a defamation suit Mr Trump had filed against ABC News and anchor George Stephanopoulos over comments he made on air stating that Mr Trump had been found civilly liable for raping writer E. Jean Carroll. A federal jury determined Mr Trump was liable for sexual abuse. Disney agreed to contribute $US15m to Mr Trump’s presidential foundation or museum as part of the settlement, and to pay $US1m in legal fees to Mr Trump’s lawyer.

The Wall Street Journal