Weekend Law: The Next AG, Justices Testify & Blocking Paramount Takeover

0:00So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise, proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM. Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it.

0:36That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person. How you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optim.com.

1:26opportunity. Seize your opportunity at michiganbusiness.org. This is Bloomberg Law with June Grosso from Bloomberg Radio. Senator, I will say that President Trump trusts me to give him counsel. Counsel does not mean yes, man. And so that's and that's true in my case, like it should be in any attorneys generals. Todd Blanche tried to assure skeptical senators that he was no longer acting as President Trump's personal lawyer. But then there was this answer, which seemed to indicate that the Justice Department would not be independent from Trump under Blanche's leadership. The Department of Justice, like every single department in the executive, is part of the executive.

2:13I mean, Article 2 of the Constitution gives the power of the executive to President Trump. So we certainly operate with integrity. We certainly operate in the single mindset to serve the American people and do the right thing. But I am a member, if confirmed, I will be a member of the cabinet. For five contentious hours, Blanche was questioned about his brief but tumultuous tenure as acting attorney general, which saw the bungle release of the Epstein files, the prosecution of the president's political enemies, criticism of DOJ lawyers by federal judges. And the topic that drew the most questions was Blanche's creation of a$1.8 billion anti-weaponization fund to compensate Trump's allies.

3:01Though Blanche insisted the fund is dead, Trump hasn't agreed to that in writing. And under questioning by Republican Senator John Cornyn, Blanche admitted that the agreement could be resurrected.

3:14David Super:Is the settlement agreement enforceable as a contract by the parties? Well, yes, it's an enforceable document. So I suppose if President Trump's counsel sought to enforce it, they potentially could. Including the weaponization fund? Well, they could try to enforce it. With Democrats united against Blanche, he needs the votes of every Republican on the Senate Judiciary Committee or his nomination will fail. Joining me is constitutional law expert David Super, a professor at Georgetown Law. David, what's your general impression of how Blanche did? I mean, he's a smart lawyer. There are some lawyers in Trump's orbit who are completely incompetent.

3:57David Super:Blanche is certainly not one of those. And he's, I think, fairly quick on his feet. But he's got a record that's very difficult to defend. And he's got a boss who won't let him promise to do things that any reasonable attorney general would do. So he's been in a box several times. Some of the Democrats have done a pretty good job of pinning him down. Some of them have done a less good job of pinning him down. And some of them have just talked. There were a lot of questions about whether Blanche would be independent from President Trump. And in response to a question from Democratic Senator Chris Coons, Blanche basically said that the Justice Department is part of the executive branch.

4:46If confirmed, he'll be part of the cabinet and we all serve at the pleasure of the president. I don't know that he ever really asserted independence from the president.

4:57David Super:No, he really didn't. I mean, at one point he said that we will act with integrity. At another point, he made the predictable statement that, of course, if he was asked to do something illegal, he would resign, but that would never happen with this president. But he is part of a Justice Department that is asserting a historically broad reading of presidential powers, which includes no independence for anybody in the executive branch himself included. So he can't claim to be independent without having that used against his own lawyers when they're asserting their unified executive theory. So everyone knew that a big point was going to be the so-called anti-weaponization fund.

5:47He said several times the fund is dead, but Republican Senator John Cornyn, who's a key vote, pinned him down. And Blanche admitted that the settlement agreement is a contract and it could conceivably be resurrected.

6:00David Super:That leads me to believe that the president is not comfortable with the weaponization fund being dead because Mr. Blanche could have gotten himself out of a lot of trouble by agreeing to provide a letter declaring that and he wouldn't do it. And when he was pressed on whether they could sue for breach of contract, he more or less acknowledged that they could and didn't really have much of an answer to that. So I think President Trump has made a firm decision that he wants to help the January 6th rioters. And Mr. Blanche is trying to avoid saying anything that will burn britches that he knows he's going to have to cross.

6:49And on Monday, in a scathing opinion, a Florida federal judge said Blanche's involvement in settling Trump's lawsuit with the IRS raised conflict of interest concerns because he was Trump's former defense lawyer. And she ordered a copy of her decision to be sent to the state bar in New York, where there are several other complaints alleging serious ethical breaches by Blanche, one by hundreds of former federal judges. When he was confronted with that, Blanche said, well, that's not a referral. But it is, in essence, a referral, isn't it?

7:25David Super:That's a referral. I'm quite convinced the New York State Bar can spring for an online search and get a copy of the opinion on their own. The fact that she is sending it to them suggests that she independently believes there's material in there that they ought to see. And given how scathing it is, that's obviously correct. The Attorney General is the highest law enforcement official in the country, has many responsibilities to the American people, and certainly one of them is to set a standard for ethical behavior. Now, anyone can file a complaint, and the mere fact that a complaint has been filed should not be pivotal.

8:03David Super:But the fact that some fairly serious people whose reputations matter, filed complaints should give us cause. And I would think the committee should get to the bottom of them. If Mr. Blanche has not done anything unethical, a complaint shouldn't stand in his way. But there certainly are reasons to question some things that have happened. There wasn't much questioning about something I think is critical, and that's the Justice Department losing credibility with federal judges. But Democratic Senator Sheldon Whitehouse did ask about that. Between judges appointed by every president harshly criticizing the department's work in your tenure, grand juries rejecting indictments, judicial findings of outright misconduct, capable lawyers fleeing the stinking ship.

8:53This seems to be the most troubled Department of Justice in history. history. David, we've talked before about how federal judges are repeatedly finding fault with the Justice Department and its attorneys. Blanche denied that, but that is true.

9:10David Super:I think it's unfortunate that this part of the hearing was played so theatrically. I would have loved to see a senator take a list of orders, read from this order, ask Mr. Blanche, why did your Justice Department do that? Then read from the next order, why did your Justice Department do that? And show by repeated questions just how prevalent this is, which is enormous and utterly unprecedented. As someone who was litigated against the Justice Department, their lawyers are a total pain in the neck, but they don't lie. They say nasty things, but they don't lie. Except now, they do. Blanche was questioned by several senators about the bungled release of the Epstein files.

9:58He defended the release but acknowledged that mistakes had been made and he apologized to the victims. But Democratic Senator Cory Booker pressed him on the fact that Ghislaine Maxwell was transferred to a low-security prison camp just days after Blanche interviewed her. And Booker shot down Blanche's answer that it was because she was getting threats. When people are under threats in a Bureau of Prison facility, they're put into solitary confinement or protective. They're not moved to a camp. That's not always true. It is. What is true is someone that is accused of child sex trafficking under the Bureau of Prison's own policies is not put in a facility like this that seems clearly like a reward.

10:47David Super:Senator Booker did get him to state explicitly that he had no involvement in the transfer. I don't particularly believe that. You don't sound like you particularly believe that. But there are lower level people who know the answer to that. And if he lied about that, then he has just opened himself up to a perjury prosecution. And the statute of limitations on that will extend into the next presidential term. At least Blanche succeeded in keeping the temperature down with his sort of measured answers. I was struck with how he kept trying to wriggle out of questions when it would seem that there was a fairly simple way to answer them.

11:31David Super:Would he agree to meet the Epstein victims? Evasion, evasion, evasion. Did ethics approve his dinner with the people whose antitrust investigation he was about to terminate, evasion, evasion, evasion. If he had nothing to hide, why not just say yes to some of these questions? And maybe that comes down to combativeness, but I assume it's because there's more to be said to the story. I question if these hearings really matter. Lately, they seem to be just performative. It seems to be coming down to one Republican senator, John Cornyn, who said he's not decided yet. But with these judiciary hearings, the Republican senators all seem to fall in line and vote the party line in the end.

12:22Do you think that's what will happen here?

12:24David Super:I think so. And I find that very distressing. There's no question that President Trump will get an attorney general to his liking and an attorney general who will do what he says on a great many things. But to confirm someone as attorney general who has already been personally involved in so much misconduct seems very unfortunate. And I wish more senators would say, you get your person, but not this one. We'll find out what they say in a few weeks. Thanks so much, David. That's Professor David Super of Georgetown Law. Coming up next on the Bloomberg Law Show. Twelve Democratic-led states make a last-ditch effort to stop Paramount's$111 billion takeover of Warner Brothers.

13:12They say it violates antitrust law and they've filed suit. I'm June Grosso and you're listening to Bloomberg. Support for the show comes from Public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the rest.

13:52Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures.

14:29David Super:If your best finance people are doing expense reports, chasing receipts, or spending time on month-end close, it's time to get Brex AF, a Gentic finance that eliminates that work before it starts. Learn more at brex.com slash AF. He's dribbling the ball with everything on the line. He's driving down the pitch. He's facing price hikes and cuts past him. Carrier Contracts tries to block him. Oh, he leaves him in the dust. He's at the edge of the box. He cuts past the nonstop group chat trash talk. He clears on goal. He shoots. No! Unlimited data for$25 a month forever. Visit your local Boost Mobile store today to get unlimited data with a price that never changes.

15:08Boost Mobile. After 30 GB, customers may experience lower speeds. Customers will pay$25 a month as long as they remain active on the Boost$25 unlimited plan. Movie theaters, basic cable TV distributors and audiences on every sofa and in every movie seat would feel the impact of this unlawful merger. California is leading a lawsuit by a dozen states to block the largest merger in the history of Hollywood. The states allege that Paramount's$110 billion takeover of Warner Brothers' discovery would result in less competition, higher prices for consumers, and fewer choices on the big and small screens.

15:49The Justice Department cleared the transaction without any conditions last month. And California Attorney General Rob Bonta says the states are suing because the federal government is not enforcing the antitrust laws. DOJ, the federal government, has advocated its responsibility to engage in firm and fair antitrust enforcement. That's been a traditional role they've played. They're not playing it now.

16:13Louis Michael Seidman:Not only are they not playing it, but they're actually affirmatively making things worse by trying to usher through deals that are unlawful. Paramount vowed to vigorously defend the transaction. My guest is an expert in antitrust law, Professor Harry First of NYU Law School. Harry, the states claim that this deal would create a media behemoth. So, yes, there are five big companies, but monopolistic and five don't go together. Maybe, you know, in talking about power in sort of a colloquial way, but from a legal point of view, we're not talking about monopoly. But we are talking about significant power.

16:53And for antitrust, it's market power. For Hollywood, it's money. For many people, it's cultural power. And apparently for the president, it's CNN. I mean, I don't know, but that seems to be. So it's lots of things colliding, you know, which makes the merger really interesting, you know, along many dimensions. So what makes it also interesting and horrible in a way is that the story plays out in a way that we're too familiar with today in the Trump administration. But really, we've never seen before in this direct overt way, which is there's the law and there's we don't care about the law. It's what the president wants today.

17:38And this case has played along those two tracks. And the spoiler in this is also partly political, but has to play on the legal track, can't play on the political track. And that's the states. As you referred to there, the merger has been the subject of intense lobbying in D.C. by Paramount. So tell us about the political track of the deal. The background, the political background starts unusually before Paramount's bid for Warner is accepted or really made legally. And if you read what the Justice Department did at the very end, they said in June that we've been investigating this for eight months.

18:20That's pretty interesting since the merger was just noticed to them in February. I know my math is bad, but it's not that bad. That means they started investigating this case before the merger was officially notified. Now, normal practice is you can't get the Justice Department to tell you what they're going to do until you do something. You can't call them up and say, excuse me, will you give me an advisory opinion? In some jurisdictions, you can. In the United States, you can't. But apparently these people could because this was going on at a time when the president was just putting a big thumb.

18:57I don't know, hand, arm, on the scales for Paramount. Okay, so in February, this deal gets cleared without what's called a second request. So in important mergers, the government says, excuse me, you can't close the deal until we look more deeply at all the documents. So you have to hold off until you've produced all the documents to our satisfaction. That's the norm in a big deal like this. Not for this deal. In February, they say, we're not even going to do a second request. That's the political track. What about the legal track to the deal? They go through some sort of investigation and they close the investigation, which they've already sort of closed by not issuing a second request.

19:40They close this just in June. And a couple of things interesting about that. Normally, the Justice Department does not issue closing statements to explain what they're doing. It's very rare. And one of the problems with filing closing statements is that the people who write them have certain goals, want to justify what they've done. But another goal may be to short circuit other plaintiffs. So if you can write this and say, you know, my God, this case was, you know, nothing there, baby. And you think the states are going to file, you know that a federal judge is going to read that. And maybe it will affect what they do.

20:20Can you give us the highlights of the Justice Department's closing statement? There are certain things that are not there and certain things presented in an interesting way. So they start out with streaming as, you know, nothing to see here. Well, in some ways, that actually is the weaker part or the less suspicious part of the case. There are three major streaming services and a fourth, if you put in Disney, HBO Max and Paramount Plus. You know, these are distant competitors. So you can make a credible claim that it's still a very competitive market and not one to sue about. So that's where they start.

21:02And then they go to what they call linear TV, which I think is an interesting description. You know, I'm not sure exactly what they mean by that, except they've combined two words that indicate junk. So it's supposed to be cable. Hard to say exactly. They're not really clear, but they say, you know, no problem here because this kind of TV faces so much competition from pay services, from streaming, from live, from sports, from blah, blah, from who knows, not a problem here. And then, of course, they say for last the thing that you might start with first, which is studio film production, because this is where the parties are direct competitors.

21:48Paramount and Warner, you know, they make blockbusters. But, you know, nothing to see here, because after all, lots of competitors. Netflix makes theatrical releases. Yeah, I guess. Amazon and Disney, and there's lots of other stuff. And so don't worry about that. And don't worry about impact on workers in Hollywood, because all the incentives are to make more films and distribute them theatrically. Nothing about viewpoint diversity, which a lot of people are worried about, but it's hard to make out as an antitrust matter. You know, CNN and CBS under the same tent. Enough concern about CBS now, but now they're going to control CNN.

22:31No mention of that. Doesn't give us any market shares. So that's the first thing you look for, but doesn't mention that. And to cap it off nicely, the Wall Street Journal follows with a story that says, shock and amazement, the staffers working on this were surprised when the closing statement was issued, which they had no role in drafting. Sound familiar? Yes, it happened when the Justice Department in D.C. settled the Live Nation Ticketmaster suit without telling the career attorneys who were prepping for trial. Harry, did the states draft their complaint around or in response to what the Justice Department had stated in its summary of why it was declining to prosecute the case?

23:19You know, if you were being skeptical of this complaint, you'd say this is the complaint to save all the parts of Hollywood that everyone says is dead. The movie theaters, the big motion picture theatrical producers and the cable companies. And it's basic cable. It's not fancy cable that we pay for with bazillions of dollars. It's basic cable that gets you the basic channels, not the premium channels. It gets you the over-the-air broadcasting. So that's the focus of this complaint. It's not on streaming. This is, to my first reading, a non-ideological, carefully drafted complaint designed to stop this merger and not get embroiled in any fancy theories.

24:10is there's no labor market theory in this. They start with the place where justice stops, which is wide-release theatrical films, you know, where the competition is direct. And then they go to the super sellers, the anticipated top-grossing theatrical films, which is something the Justice Department did in the booksellers merger. You know, the New York Times bestsellers was the market there, the Bertelsmann case. So there are echoes there. This is carefully done. And then licensing of basic cable channels. And it points out how the two companies are bringing together Turner stuff, all sorts of stuff.

24:50And the cable companies need the package. You know, they need the bundle of stuff. And maybe the fancy people have cut the cord, but there's still a lot of people who are looking at their cable. And it's aimed at that. And I think it's very clever. Do the states talk numbers which the feds didn't? We now have concentration figures, Herfindahl-Hirschman Index, a fancy way of saying that these are concentrated markets. And the complaint references the merger guidelines, the federal merger guidelines, like these are way over the top. Nice job. And they're looking directly at horizontal competition and price raising.

25:29Sort of one final thing that I noticed, it's co-signed in council by a private law firm. that's been hired by California and signed by a very highly respected antitrust litigator, Rich Parker. This is a well-done, careful complaint. From my reading, well done. So this deal is not over yet, and it's not, you know, a throwaway complaint. In response to the lawsuit, Paramount said, numerous antitrust authorities around the world have concluded the transaction creates a stronger competitor against dominant streaming and technology platforms that have harmed the market for theatrical exhibition and jobs in the entertainment industry.