Weekend Law: White House Media Ban, Paramount Settles & The Arch

0:00The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand, but by embedding AI across HR, IT and procurement processes, we've reduced costs by millions, slash repetitive tasks and freed thousands of hours for strategic work. Now we're helping 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. That's the kind of stuff Optum is changing.

0:38They'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. As industries evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance.

1:19With our unified Team Michigan approach, businesses scale faster and compete at the highest level. Michigan, pure opportunity. Seize your opportunity at michiganbusiness.org.

1:32David Super:This is Bloomberg Law with June Grosso from Bloomberg Radio. It's sick. I mean, there's something wrong with a country that can allow people to write purposely negative stories. Now, if they want to write them, that's fine, but I don't have to let them into the people's house. President Trump admitted on Monday that he was banning three prominent news outlets from the White House because he didn't like their coverage of him. Those news organizations, CNN, MSNOW and Politico, sued saying the ban was a direct assault on the First Amendment. And by Thursday, they were allowed back into the White House after a federal judge blocked Trump's ban.

2:20Judge Timothy Kelly, a Trump appointee, found that the news organizations had met the high bar of showing they were likely to succeed on the merits of the case. Trump's ban marked a significant escalation in his efforts to put restraints on journalists and control the narratives surrounding his presidency, an extraordinary move no president before him has ever taken, and one that former President Barack Obama found stunning. You just can't come to the White House press briefings anymore because you're giving the current president unfavorable coverage. I'm trying to think what would have happened if I had said, you know what, Fox News, you're out of here.

3:07It's unimaginable. Joining me is an expert in the First Amendment, Timothy Zick, a professor at William & Mary Law School. Tim, is Trump's war on the press escalating or is it just more of the same? So ever since Trump entered politics, he's been railing against the press and journalists and particularly outlets that report critically on the administration or him. And when they report things he doesn't like, he denigrates them. He calls it fake news. And now in the second term, he's taking more concrete action than he was in the first term. So this is an escalation. It's blatantly unconstitutional to exclude the press or particular journalists or particular media based on the point of view that they publish or the content of what they publish, whether he likes it or not.

3:59that is the definition of a free press, that the president can't just pick and choose the coverage he wants. Every president would like to do that, of course, but only in authoritarian countries can you actually pick and choose which news gets reported and punish reporters that don't sort of toe the party line. Tell us about the news organization's claims in their lawsuit that the ban is a blatant violation of the First Amendment. The president singled out particular media outlets for sanction, in this case, exclusion and revocation of their press credentials, based on what they wrote, based on the sort of negative coverage as he sees it, or critical coverage, or the perspective of their publications.

4:43That is a violation of the First Amendment, whether it takes place in this context or some other. And the reason it's a violation here is that journalists are, of course, invited to come to the White House where news is made and to do their job. It's important that they be there. And when the government makes that kind of benefit available, access, it can't deprive it just for certain media outlets based on the content of what they're reporting. Did you expect the judge to issue this temporary restraining order? Was it any surprise? I did. I'm not surprised because the same judge issued a similar order with respect to Jim Acosta, who had been denied his press credential without due process during the first Trump administration.

5:25So it's the same judge, same issue. You know, given the law on the D.C. Circuit with respect to this issue, which has come up multiple times now, it's hard to escape the conclusion in this particular context. So who knows what happens after, but at least as far as due process is concerned, this is a necessary decision and one that follows the law. So it comes as no surprise. Let's talk about the national security argument, which the government raised after the lawsuit was filed. And letters which were provided to the court said that CNN, MSNOW and Politico were banned for trafficking in verifiable falsehoods about national security and publishing sensitive or classified information.

6:09The judge tore that argument apart in several different ways. What's your take on it? Well, I'm as skeptical as the judge was at the hearing and in the opinion, in part because none of that was mentioned when Trump blurted out his ban. So the explanation that he gave was fake news and these stories are negative and they diminish me and you shouldn't have the right to do that from inside the hallowed halls of the White House. So it seems like a post hoc rationalization, an effort to sort of have a court defer, because when courts hear national security, oftentimes they will give some deference to the government.

6:49But this judge didn't, in part because he said this all seems to be post hoc. And at least so far on the record, they didn't submit any affidavits or any evidence of any kind of national security breach. Worse than that, I think some of their examples were situations where the press had based its news reporting on anonymous sources from inside the White House. So it's pretextual, I think, is the right word for it, unless and until they come up with some evidence to support it. So was the weight of the judge's decision based on due process arguments? Yes, this opinion is based solely on the deprivation of due process, the lack of any sort of process or standards or notice to these journalists before their credential was revoked.

7:34And the court mentions press freedoms, but only as part of the reason to grant preliminary relief, this sort of irreparable harm that would occur in the absence of some relief. And that irreparable harm, of course, is press freedoms are being violated. So it does not address, you know, is the White House a public forum? Do you have a First Amendment right to report from there? Nothing about the sort of seeming viewpoint discrimination that's part of any of this. So if that's going to come in, it's going to come in in some future proceeding. So what the news organizations got here was a temporary restraining order, which lasts two weeks.

8:12The judge is next going to consider whether to grant longer term relief in the form of a preliminary injunction. Do you expect the arguments for a preliminary injunction will basically be the same and perhaps the outcome too? I would expect so. You know, it's possible that on that schedule, the administration will have someone who knows who sign an affidavit about some national security problem. In other words, try to fix one of the problems that Judge Kelly identified, which is a lack of any sort of evidence. but I'm not sure that's going to fix the problem or unring the bell of the president saying in the beginning I'm banning a free press I'm doing it because I don't like the way they report on me they shouldn't have the right to come here and criticize me was the essence of what he said in my own house he said in the White House so I expect the arguments to be similar I expect maybe a little more in terms of evidence from the administration but I would expect a preliminary injunction.

9:13And then, of course, beyond that, efforts to stay that injunction to get the D.C. Court of Appeals involved. And on we go. What about the due process claims? Can the administration cure those? In the sort of interim here, in the period we're in now, it's possible the administration says, well, we'll come up with a process. You can have your credentials back. The court said we had to have a process before we deprived you of them. And they'll come up with a process and then deny them, which may or may not resolve the due process problem. And it says nothing about the First Amendment issue. So going forward, you know, if the administration doesn't do that sort of due process fix, it's going to be the same result.

9:55It could be that they can fix the process piece, but not the First Amendment piece. So there's going to be more litigation on this. I don't expect the administration to just lay down and say, well, welcome back in. It's good to see everyone. You know, that's not the M.O. of Trump 2.0. And so expects further proceedings. The M.O. is quite different. The Associated Press sued last year over being excluded from Air Force One and the Oval Office because it refused to use the Gulf of America instead of the Gulf of Mexico. That suit is pending. And the Treasury Department excluded journalists from several outlets, including Bloomberg News, the New York Times, and the Wall Street Journal, from covering the recent Group of 20 finance ministers' summit.

10:44And those are just a few of the examples. There have been lawsuits filed by the New York Times, in particular over New Pentagon press policies, and those have been successful so far in the court. So this is sort of an extensive all-of-executive-branch campaign against the press. So, you know, the FTC, the FCC, which has been at war with Disney and ABC. It's not just the one thing. To sort of take a wider lens here, and sometimes those restrictions result in lawsuits, and I'm suspecting sometimes they result in, I don't know if you'd call it negotiations, behind the scenes rather than litigation.

11:21But they're all troubling from a First Amendment perspective, putting aside the sort of technicalities of First Amendment doctrine or due process rights. It is not committing yourself to a free press to conduct yourself the way this administration is. Quite the opposite. Tim, let's say Judge Kelly grants the preliminary injunction and it's affirmed by the D.C. Circuit, as we expect. Trump will probably go to the Supreme Court. But would the Supreme Court have any interest in taking a case like this? I mean, it's possible they would, you know, whether it's on the due process issue or the First Amendment issue.

11:59You know, one of the things the administration was arguing in the district court is some of the D.C. Circuit precedents should be overruled. And we do not have at this point guidance on, again, what kind of forum is the White House? What kind of access rights do journalists have there? So it's possible the court could be interested in making law on that. I mean, what it said about news gathering and press freedoms, as you probably know, isn't comprehensive. So there isn't a lot of detail. The press has the rights that ordinary Americans have, right, to gather information and publish it. But, of course, the press plays a special role in that process and is a particularly interested institution.

12:39And I don't know. I would worry if the court did get it. It has not been sort of making positive noises about press and press freedoms and its opinions. And so I would be wary of the court sort of opening this issue. Well, we still have a way to go in the litigation before that might come up. Thanks for a great conversation, Tim. That's Professor Timothy Zick of William & Mary Law School. Coming up next on the Bloomberg Law Show, Paramount wins big as it settles the state's antitrust case, clearing the way for its historic$110 billion merger with Warner Brothers Discovery. I'm June Grosso, and you're listening to Bloomberg.

13:18This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT Work, I'm Carol Masser. AI is creating a new path for musical stardom. As Bloomberg's Lucas Shaw and Ashley Carman report, Suno, an AI-generated music company, lets users generate a song in any style based on a text prompt. People can upload their own lyrics or start from scratch, record their own voices, or rely on ones provided by Suno. While most of the songs generated on the service go unheard of by the masses, a few have taken off, including a recent TikTok trend that involves users uploading text messages to Suno and turning them into musical performances, like taking the text from a crazy night out and making it a gospel song.

14:03Suno's pitch to investors is that it'll democratize music creation, leading to a more than$5 billion valuation for the company. The music industry, it's watching, as its biggest concern about AI is whether record labels, rights holders, and artists will be compensated for the work they claim built the training models for companies like Suno. Another question? Will these AI bangers have any staying power or just be one-hit wonders? That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com today by selecting Work Mode, available on Plus and Pro plans.

14:43At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters so you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. Edward Jones, member SIPC.

15:13Jennifer Rie:As a restaurant genius, I know the experience starts long before the food hits the table. Genius by Global Payments makes it easy. Digital menus and price updates in real time. No reprints, no surprises. The kitchen and floor stay perfectly in sync. So every dish arrives exactly as it should. From game day crowds to memorable meals. Big League reliability for any business. That's genius. On Monday, California Attorney General Rob Bonta announced the settlement of the antitrust lawsuit brought by 12 states to stop Paramount's$110 billion acquisition of Warner Brothers' discovery. This settlement is not a vote of support for this merger.

16:04It is not a blessing of the broader merger. Broadly speaking, we believe further consolidation in markets that are central to American economic life doesn't serve the American economy, consumers, or competition well. The settlement may not have been a vote of support for the merger, but it was the only obstacle left that could have prevented the deal from going through. The Democratic Attorneys General and the Writers Guild had argued that the deal would give Paramount an undue share of the movie and cable TV industries, and the settlement does nothing to change that dominance. Paramount is not required to make any divestitures.

16:48It just has to comply with a series of terms, like releasing 12 films a year to theaters. The blockbuster deal will vastly reshape Hollywood, with Paramount now controlling two of its biggest studios, two major subscription streaming services, dozens of TV channels ranging from CBS to HBO, and iconic characters from Superman to Batman and Harry Potter to Captain Kirk. Joining me is Bloomberg Intelligence Senior Litigation Analyst Jennifer Rhee. Jen, what is Paramount giving up to get this settlement?

17:24Jennifer Rie:Very little. Really, at the end of the day, I think this is a win for Paramount and a surprising settlement because we all expected something structural. And that's where I see it as a win for Paramount because there's nothing structural in it. By that, I mean, June, that they have to sell something rather than just making a bunch of promises about how they're going to behave once they're merged. Now, there are some divestiture commitments in here, but only if the merged company is in breach of certain terms, of which I doubt they'd be in breach of because it's actually pretty easy agreement with which they can abide.

17:53And I understand that a lot of these terms, Paramount had been offering for months, including releasing 30 films a year in theaters.

18:02Jennifer Rie:Yes, you know, they had. And I think in some ways, some of these commitments really aren't a big change from the way they've just always done business. You know, for instance, people are talking about this commitment to release 30 movies to theaters every year. Now, that's release, not make. So it doesn't necessarily have to be a movie that they produce, but they only have to either produce or co-produce 50%. So that's the first thing. And it's really not that different from what they're already each individually doing. So this isn't asking for much from Paramount. And it seemed like California and the states were holding all the cards.

18:39Paramount was set to face late fees of$7 million a day if it didn't close the deal by the end of the month, and$7 billion if the deal fell apart. The states beat Paramount in court, winning a court-ordered pause on the merger. It seemed like they had an edge in the negotiations at this point.

18:59Jennifer Rie:Absolutely. It was a very odd situation because I think the states very much had leverage, not because their case against the merger was so strong, because honestly it wasn't that strong, But because time, time and the financial aspects were on their side. And I really think that they could have waited this out. It would have put more pressure on Paramount. Maybe they might have gotten better terms. But then Paramount, knowing I believe that it didn't have the leverage it needed for a settlement negotiation to come out favorably, threatened to leave California. And I think that's what did it, because that would have been devastating on the state and had an impact on the state's economy, as well as so many employees and people who live there.

19:35Jennifer Rie:And I think it was that threat that the attorney general of California called blackmail. I think of it as just trying to do what they can to get leverage that did give them the leverage to get to this settlement and to get to it when they did, which was mid-September. And I kind of thought late September would be more likely. Apparently, pressure was on the attorney general Bonta from the governor, L.A.'s mayor. I mean, would Paramount really have left California in the end? It really would have been a major disruption to their business and actually quite an endeavor and very expensive for them.

20:07Jennifer Rie:And that was the big question. You know, it was funny. I had so many clients saying, are they going to do this or not? Is this a real threat or not? And I'd say, look, I'm not in their head. I can't say what the company would or wouldn't do. But it was enough of a threat. There was enough of a concern that it did what they wanted it to do, which was to get a settlement out of the States and a settlement that's widely favorable in my view to Paramount. So California had its reasons for this. But the other states, and there were several states that were holding out, including New York, Connecticut, Massachusetts, and Minnesota.

20:39According to Bloomberg sources, they decided that the expense of litigating without California would be too much.

20:46Jennifer Rie:You know, I have to say that if you look at the cases where states have been the plaintiffs and alone without the federal government or without private parties, it tends to be pretty big groups of states. You have 12, you have 14. I think it was something like 14 when the state sued to block T-Mobile and Sprint. You had a pretty big group of states going after Nexstar and Tegna and also a big group of states going after Live Nation. You know, they have one or two antitrust attorneys. They don't have the money. They don't have the physical resources. And then they're going up against major heavy hitter lawyers on the other side and unlimited resources, essentially.

21:20Jennifer Rie:And California was leading. So you have to remember that this litigation now has been going for quite some time. California has been in the lead. It is a little bit difficult for another state to take over that role and jump in. So I do think that once California and other states had decided that they were going to settle, the other states really had to, as did the Writers Guild of America, which was also a plaintiff. Yeah, the Writers Guild apparently was blindsided. The settlement they reached is even weaker, and I think they must have been blindsided because their concerns about harm were to writers markets, writers of movies, writers of television shows, writers that are signed on contract with studios.

21:56Jennifer Rie:And instead, what they agreed to was some guarantee of employment for CBS News Bureau, which is different from the areas which they said would be harmed. So now let's talk about that. You have now Paramount is going to control both CBS News, and we've seen what's happened at CBS News. So they'll control CBS and CNN. And apparently the Connecticut Attorney General was really pushing for a divestiture of those networks, but Ellison would not agree to that. So now there's going to be an independent editorial oversight board. What does that mean? Well, you know, let's just say that it's really something that's quite unenforceable.

22:34Jennifer Rie:So it's a board made up of five people. They have to be journalists, retired or currently acting journalists. And there are a bunch of qualifications written into the settlement as to what that means to be an experienced journalist. And no more than two can be from the same political party. But here's the kicker. They will be appointed by Paramount. So Paramount will be picking these five people, even though no more than two can be from one political party. So they're picking the editorial board that's supposed to oversee their own business. That seems to me a little bit ridiculous if you really wanted this neutral editorial board.

23:06Jennifer Rie:But the board is intended to establish guiding editorial principles. And those principles are supposed to be based on CBS News' and CNN's standards and practices now before they close. So whatever their practicing policies are now, they're supposed to stick to those. And this board is supposed to make sure that they stick to those. And then they're going to resolve disputes if they arise between CBS News or CNN and the management of the combined company. And so let's say there's pressure on CNN to take a conservative turn to, let's say, have more stories in favor of the administration. What can be done?

23:41Anything?

23:41Jennifer Rie:Well, the first thing that would happen is if there was a dispute, if the journalists object to this, then this dispute between those journalists and the Paramount management would be resolved by this editorial independence board. Now, there's another layer that oversees this entire agreement. There's a monitor, right? There will be an internal monitor and then also an outside monitor chosen by the states and Paramount together. And then that monitor could step in. But the thing is, June, if there's some problem, if whatever's happening is considered a breach, really the only way to fix it, the only way to make the company act differently would be then to go back to court.