Latest / Bloomberg Law / States Sue to Stop Paramount Takeover of Warner Bros.

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States Sue to Stop Paramount Takeover of Warner Bros. · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.
0:08
Speaker 2: Movie theaters, basic cable TV distributors, and audiences on every
0:14
Speaker 2: sofa and in every movie seat would feel the impact
0:18
Speaker 2: of this unlawful merger.
0:21
Speaker 3: California is leading a lawsuit by twelve states to block
0:25
Speaker 3: what would be the largest merger in the history of Hollywood,
0:28
Speaker 3: the combining of two of the largest entertainment companies in
0:32
Speaker 3: the world. The anti Dross lawsuit claims that Paramounts one
0:37
Speaker 3: hundred and ten billion dollar takeover of Warner Brothers Discovery
0:41
Speaker 3: would result in less competition, higher prices, and fewer options
0:46
Speaker 3: on big and small screens. The Justice Department declined to
0:51
Speaker 3: challenge the deal last month, and California Attorney General Rob
0:55
Speaker 3: Banta called out backdoor deals trampling on consumers and free markets.
1:01
Speaker 2: Anti trust enforcement is a check on billionaires currying favor
1:07
Speaker 2: with the president so he'll do they're bidding.
1:10
Speaker 3: Thousands of actors, directors, writers, and other industry professionals have
1:15
Speaker 3: voiced unequivocal opposition to the Paramount deal, arguing that further
1:20
Speaker 3: consolidation will lead to job losses and fewer choices for
1:24
Speaker 3: filmmakers and moviegoers. Paramount said the lawsuit distort settled anti
1:30
Speaker 3: trust law and maintained that its merger would create a
1:34
Speaker 3: stronger competitor against dominant streaming and technology platforms. My guest
1:40
Speaker 3: is an expert in anti trust law, Professor Harry First
1:44
Speaker 3: of NYU Law School. Harry the States claimed that this
1:48
Speaker 3: deal would create a media behemoth.
1:52
Speaker 1: Interesting. So this was a choreagraph that appeared in a
1:56
Speaker 1: book review that was written by Ty Burr, who had
2:00
Speaker 1: been the Boston Globes movie reviewer for many years. It's
2:05
Speaker 1: a book about mergers at the movies, and he ends
2:08
Speaker 1: it by saying that this merger would reduce the number
2:12
Speaker 1: of media behemoths to a monopolistic five. So yes, but no,
2:21
Speaker 1: so yes, there are five big companies, but monopolistic and
2:26
Speaker 1: five don't go together, so maybe they do for ty
2:30
Speaker 1: Burger and you know, and talking about power in sort
2:34
Speaker 1: of a colloquial way, but from a legal point of view,
2:38
Speaker 1: we're not talking about monopoly, but we are talking about
2:41
Speaker 1: significant power and or any trust. It's market power for Hollywood,
2:47
Speaker 1: it's money for many people, it's cultural power, and apparently
2:51
Speaker 1: for the president it's CNN. I mean, I don't know
2:54
Speaker 1: but that seems to be how it comes out. So
2:57
Speaker 1: it's lots of things colliding, you know, which makes the
3:02
Speaker 1: merger really interesting, you know, along many dimensions. So what
3:07
Speaker 1: makes it also interesting and horrible in a way is
3:12
Speaker 1: that the story plays out in a way that we're
3:16
Speaker 1: too familiar with today in the Trump administration, but really
3:21
Speaker 1: we've never seen before in this direct overt way, which
3:25
Speaker 1: is there's the law and there's we don't care about
3:29
Speaker 1: the law. You know, it's you know what the president
3:33
Speaker 1: wants today. And you know, this case has played along
3:36
Speaker 1: those two tracks. And the spoiler in this is also
3:41
Speaker 1: partly political, but has to play on the legal track,
3:44
Speaker 1: can't play on the political track, and that's the States.
3:47
Speaker 3: As you're referred to there. The merger has been the
3:49
Speaker 3: subject of intense lobbying in d C. As executives, including
3:56
Speaker 3: the head of Paramount David Ellison, have tried to curry
3:59
Speaker 3: faith with President Trump and other administration officials. So tell
4:05
Speaker 3: us about the political background of the deal.
4:08
Speaker 1: The background, the political background starts unusually before Paramount's bid
4:15
Speaker 1: for Warner is accepted or really made legally. And if
4:19
Speaker 1: you read what the Justice Department did at the very end,
4:23
Speaker 1: they said in June that we've been investigating this for
4:29
Speaker 1: eight months. That's pretty interesting since the merger was just
4:33
Speaker 1: noticed to them in February. I know my math is bad,
4:36
Speaker 1: but it's not that bad. So that means they started
4:39
Speaker 1: investigating this case before the merger was officially notified. Now,
4:45
Speaker 1: normal practices, you can't get the Justice Department to tell
4:48
Speaker 1: you what they're going to do until you do something.
4:52
Speaker 1: You know. You can't call them up and say, excuse me,
4:54
Speaker 1: will you give me an advisory opinion, and some jurisdictions you can.
4:58
Speaker 1: In the United States you can't, but apparently these people
5:02
Speaker 1: could because this was going on at a time when
5:05
Speaker 1: the President was just putting a big I don't want
5:09
Speaker 1: to say thumb, I don't know, hand arm whatever he's
5:13
Speaker 1: got on the scales for Warner. So Paramount hires the
5:19
Speaker 1: guy who used to head the any Trust Division in
5:22
Speaker 1: trump On to guide this thing through legally through the
5:26
Speaker 1: any Trust Division, and he does a pretty good job
5:30
Speaker 1: for his client. Whether it's for us as another story,
5:33
Speaker 1: but we didn't hire him, paramounted, Okay, So in February
5:38
Speaker 1: this deal gets cleared without what's called a second request.
5:42
Speaker 1: So in important mergers, the government says, excuse me, you
5:45
Speaker 1: can't close the deal until we look more deeply at
5:48
Speaker 1: all the documents. So you have to hold off until
5:52
Speaker 1: you've produced all the documents to our satisfaction. That's the norm,
5:56
Speaker 1: and a big deal like this. Not for this deal
5:58
Speaker 1: in February, they say, we're not even going to do
6:00
Speaker 1: a second request. They could have closed it in February,
6:03
Speaker 1: but they didn't, so they've continued to fight about it.
6:06
Speaker 1: But this is the political track to the deal. But
6:10
Speaker 1: then comes the legal track, which is they go through
6:13
Speaker 1: some sort of investigation and they close the investigation, which
6:19
Speaker 1: they've already sort of closed by not issuing a second request.
6:24
Speaker 1: They close this just in June. And a couple things
6:28
Speaker 1: interesting about that. Normally the Justice Department does not issue
6:33
Speaker 1: closing statements to explain what they're doing. It's very rare,
6:39
Speaker 1: so you might say, why did they do it here?
6:42
Speaker 1: Good story. They like to be transparent. You know, you
6:45
Speaker 1: remember used to say those math exams show your work, right,
6:48
Speaker 1: you didn't just guess at the answer. So they want
6:50
Speaker 1: to show their work. However, when people in this business
6:53
Speaker 1: show their work, they have certain incentives, not to show
6:56
Speaker 1: all their work, but to show it in the most
6:58
Speaker 1: positive light. This is not a math problem. This is
7:01
Speaker 1: a question of judgment. So they file this closing statement.
7:06
Speaker 1: And one of the problems with filing closing statements is
7:09
Speaker 1: that the people who write them have certain goals. Want
7:12
Speaker 1: is to justify what they've done, but another goal may
7:15
Speaker 1: be to short circuit other plaintiffs, because the federal authorities
7:21
Speaker 1: are not the only people who can sue a stop mergers,
7:24
Speaker 1: and specifically the states can. So if you can write
7:27
Speaker 1: this and say, you know, my god, this case was
7:31
Speaker 1: but you know nothing there, baby, and you think the
7:35
Speaker 1: states are going to file, you know that a federal
7:37
Speaker 1: is going to read that and maybe it will affect
7:40
Speaker 1: what they do. So some people believe, and it's possibly true,
7:46
Speaker 1: that one of the goals was to influence any possible
7:49
Speaker 1: state litigation. So that's the second interesting part. And the
7:53
Speaker 1: third part is how they wrote about the case. And
7:58
Speaker 1: it turns out to be interesting because it's so different
8:01
Speaker 1: from the state's complaint. And you know, maybe they wanted
8:05
Speaker 1: to show their work in a positive light, but there
8:08
Speaker 1: are certain things that are not there, and certain things
8:12
Speaker 1: presented in an interesting way. So they start out with
8:16
Speaker 1: streaming as you know, nothing to see here. Well in
8:20
Speaker 1: some ways that that actually is the weaker part or
8:23
Speaker 1: the less suspicious part of the case. There are three
8:26
Speaker 1: major streaming services and a fourth. If you put in Disney,
8:31
Speaker 1: HBO Max, and Paramount Plus. Do you watch Paramount Plus?
8:35
Speaker 3: No, I don't do. I HBO has to be the
8:38
Speaker 3: winner of that comparison, So.
8:41
Speaker 1: You know, these are distant competitors. Netflix is dominant. You know,
8:47
Speaker 1: Amazon is strong, Disney is strong, so you can make
8:51
Speaker 1: a credible claim that it's still a very competitive market
8:56
Speaker 1: and not want to sue about. So that's where they start,
9:00
Speaker 1: and then they go to what they call linear TV,
9:04
Speaker 1: which I think is an interesting description. You know, I'm
9:07
Speaker 1: not sure exactly what they mean by that, except they've
9:11
Speaker 1: combined two words that indicate junk who watches you know,
9:16
Speaker 1: TV in a line.
9:18
Speaker 3: I mean to tell you the truth, Harry, I'm going
9:21
Speaker 3: to have to google that unless you.
9:22
Speaker 1: Know, I don't know who does that. So it's supposed
9:26
Speaker 1: to be cable. Hard to say exactly. They're not really clear,
9:30
Speaker 1: but they say, you know, no problem here because this
9:36
Speaker 1: kind of TV faces so much competition from pay services,
9:40
Speaker 1: from streaming from live from sports, from blah blah, from
9:45
Speaker 1: wah wah from who knows, not a problem here. And
9:50
Speaker 1: then of course they say for last the thing that
9:52
Speaker 1: you might start with first, which is studio film production,
9:57
Speaker 1: because this is where the parties are direct Competitior, Paramount
10:01
Speaker 1: and Warner. You know, they make blockbusters, so you might
10:05
Speaker 1: think they'd start there, but you know, nothing to see
10:09
Speaker 1: here because after all lots of competitors. Netflix makes theatrical releases. Yeah,
10:15
Speaker 1: I guess Amazon makes stuff for Milania, oh sorry, and Disney,
10:21
Speaker 1: and there's lots of other stuff, and so don't worry
10:25
Speaker 1: about that, and don't worry about impact on workers in Hollywood,
10:31
Speaker 1: because all the incentives are to make more films and
10:34
Speaker 1: distribute them theatrically. So that's third on the list. So
10:39
Speaker 1: those are the three things. Nothing about viewpoint diversity, which
10:43
Speaker 1: a lot of people are worried about, but it's hard
10:45
Speaker 1: to make out as any trust matter. You know, CNN
10:49
Speaker 1: and CBS under the same tent. The concern about CBS
10:54
Speaker 1: enough concern about CBS now, but now they're going to
10:58
Speaker 1: control CNN thorn the MAGA side. So no mention of
11:03
Speaker 1: that doesn't give us any market shares. So that's the
11:07
Speaker 1: first thing you look for. But doesn't mention that, so
11:12
Speaker 1: those are omitted and to cap it off nicely from
11:16
Speaker 1: the Wall Street Journal follows with this story that says
11:20
Speaker 1: shock and amazement the staffers working on this, we're surprised
11:25
Speaker 1: when the closing statement was issued, which they had no
11:28
Speaker 1: role in drafting. Sound familiar.
11:31
Speaker 3: It does sound very familiar, something we've talked about recently.
11:35
Speaker 3: Stay with me, Harry coming up next on the Bloomberg
11:37
Speaker 3: Law Show. Will the States be able to convince a
11:40
Speaker 3: judge to issue an injunction to stop the deal from
11:43
Speaker 3: going forward? I'm Jim Grosso and you're listening to Bloomberg.
11:48
Speaker 3: California is leading a lawsuit by twelve states to block
11:53
Speaker 3: Paramounts one hundred and ten billion dollar takeover of Warner
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Speaker 3: Brothers Discovery. The antitrust lawsuit says the merger would result
12:01
Speaker 3: in less competition, higher prices, and fewer options on the
12:06
Speaker 3: big and the small screen. The Justice Department had declined
12:10
Speaker 3: to challenge the dal last month, I've been talking to
12:13
Speaker 3: anti trust professor Harry First of NYU Law School. Harry,
12:18
Speaker 3: did the States draft their complaint around or in response
12:24
Speaker 3: to what the Justice Department had stated in its summary
12:29
Speaker 3: of why it was declining to prosecute the case.
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Speaker 1: So I'm glad that we had this call after they
12:35
Speaker 1: filed the complaint because I would not have predicted it.
12:39
Speaker 1: And you know, if you were being skeptical of this complaint,
12:43
Speaker 1: you'd say, this is the complaint to save all the
12:46
Speaker 1: parts of Hollywood that everyone says it's dead, the theaters,
12:50
Speaker 1: the movie theaters, the big motion picture producers, theatrical producers,
12:55
Speaker 1: and the cable companies. And it's basic cable. It's not
12:59
Speaker 1: fa fancy cable that we pay for with bazillions of dollars.
13:04
Speaker 1: It's basic cable that gets you CNN, the basic channels,
13:10
Speaker 1: not the premium channels, not even HBO. But it gets
13:13
Speaker 1: you CNN, it gets you MTV, I don't know, it
13:17
Speaker 1: gets you those kinds of things. It gets you the
13:19
Speaker 1: over the air broadcasting. You know, it's basic cable. So
13:24
Speaker 1: that's the focus of this complaint. It's not on streaming,
13:28
Speaker 1: so they don't go after streaming either. This is, to
13:33
Speaker 1: my first reading, a non ideological, carefully drafted complaint designed
13:42
Speaker 1: to stop this merger and not get embroiled in any
13:48
Speaker 1: fancy theories. There's no labor market theory in this. They
13:52
Speaker 1: start with the place where justice stops, which is wide
13:57
Speaker 1: release theatrical films, you know, where the competition is direct.
14:02
Speaker 1: And then they go to the super sellers, the anticipated
14:07
Speaker 1: top grossing theatrical films, which is something the Justice Department
14:11
Speaker 1: did in the bookseller's merger. They looked at, you know,
14:14
Speaker 1: the New York Times Bestsellers was the market there, the
14:18
Speaker 1: Bertlsman case, so their echoes there. This is carefully done.
14:22
Speaker 1: And then licensing a basic cable channels, and it points
14:27
Speaker 1: out how the two companies are bringing together turner stuff,
14:31
Speaker 1: all sorts of stuff, and the cable companies need the package,
14:36
Speaker 1: you know, they need the bundle of stuff. And you know,
14:39
Speaker 1: maybe the fancy people in Brooklyn have cut the cord,
14:44
Speaker 1: but there's still a lot of people who are looking
14:46
Speaker 1: at their cable and it's aimed at that. I think
14:50
Speaker 1: it's very clever. We now have concentration figures perf and
14:55
Speaker 1: doll Hirshman index, the fancy way of saying that these
14:58
Speaker 1: are concentrated mark and the complaint references the merger guidelines,
15:03
Speaker 1: the federal merger guidelines saying these are way over the top.
15:06
Speaker 1: Nice job, and sort of one final thing that I
15:10
Speaker 1: noticed it's co signed in council by a private law
15:14
Speaker 1: firm that's been hired by California, presumably by the States,
15:20
Speaker 1: and signed by a very highly respected any trust litigator,
15:26
Speaker 1: Rich Parker, who had been head of the Bureau of
15:28
Speaker 1: Competition in the Federal Trade Commission a number of years ago.
15:32
Speaker 1: Very well respected. This is a well done to my reading, anyway,
15:36
Speaker 1: well done, careful complaint. It's a good, good question, June.
15:40
Speaker 1: Is this a direct sort of response to the Justice Department?
15:45
Speaker 1: Not completely, because it doesn't buy this linear TV whatever
15:49
Speaker 1: that is. It avoids what may have been a trap
15:52
Speaker 1: for focusing on streaming markets, although maybe there is a
15:56
Speaker 1: question there of cutting off supply to streaming markets, but
15:59
Speaker 1: that's more of a vertical supplier buyer complaint. But they're
16:04
Speaker 1: looking directly at horizontal competition and price raising. So from
16:09
Speaker 1: my reading, well done. And we'll see, of course where
16:12
Speaker 1: that goes. So this deal is not over yet, and
16:16
Speaker 1: it's not, you know, a throwaway complaint.
16:19
Speaker 3: So Paramount said in response to the lawsuit that the
16:23
Speaker 3: lawsuit is based on a misrepresentation of competition in the
16:28
Speaker 3: entertainment industry today, as numerous anti trust authorities around the
16:32
Speaker 3: world have concluded after months of review, this transaction creates
16:36
Speaker 3: a stronger competitor against dominant streaming and technology platforms who've
16:41
Speaker 3: harmed the market for theatrical exhibition and jobs in the
16:45
Speaker 3: entertainment industry.
16:47
Speaker 1: So that's a clever political statement. It's a bad legal statement.
16:51
Speaker 1: I mean, it's not an effective legal statement. But that's
16:53
Speaker 1: not supposed to be. I guess, you know, to say that,
16:55
Speaker 1: you know, the merger will help streaming is sort of
16:58
Speaker 1: irrelevant under base antitrust law, which has not been challenged,
17:03
Speaker 1: that you can't justify a merger that hurts competition in
17:06
Speaker 1: one market by saying, oh, but look over here, Gosh,
17:09
Speaker 1: we've got some help over in a different market. So
17:12
Speaker 1: that's not going to work. Now. If you're going to
17:15
Speaker 1: somehow say this will help actually it's going to help
17:18
Speaker 1: competition in the market for theatrical movie releases, well, you know,
17:25
Speaker 1: that's going to be a bit of a hard sell,
17:28
Speaker 1: I think, you know, going around in this Although the
17:31
Speaker 1: closing statement doesn't mention, there's a lot of talk about
17:34
Speaker 1: their promise of thirty new films you know, after this merger,
17:40
Speaker 1: and you know a lot of commentaries saying, you know,
17:43
Speaker 1: what are you smoking. You know, those sort of promises
17:46
Speaker 1: tend to be discounted as a general matter. But people
17:49
Speaker 1: pointing out that releases have been contracted a number of
17:52
Speaker 1: years ahead with exhibitors. So you know, the idea that
17:55
Speaker 1: all of a sudden, you're going to increase output by
17:57
Speaker 1: thirty more is going to be up to them to prove.
18:00
Speaker 1: That's going to be their burden, you know, the justification.
18:04
Speaker 1: You know, it's on them. So I don't know. I mean,
18:07
Speaker 1: I assume they will fight it.
18:09
Speaker 3: Yeah, they say they're going to vigorously fight it as usual.
18:13
Speaker 3: Do you think that this is strong enough? Is it
18:15
Speaker 3: a given that a judge will put a hold on
18:19
Speaker 3: the merger until this suit is settled?
18:22
Speaker 1: So I think that's a great question. I thought about
18:25
Speaker 1: how likely that is. My guess is that the States
18:30
Speaker 1: are ready to litigate the merits of the case now.
18:35
Speaker 1: They have to be prepared to say we want a
18:37
Speaker 1: preliminary injunction, and we want it for a week, a month, whatever,
18:44
Speaker 1: but a short time, and then we'll have a hearing
18:46
Speaker 1: on the merits. Because everyone knows there's a big freight
18:50
Speaker 1: train here, there's a lot of money involved. We can't
18:52
Speaker 1: hang this up for a year playing around with when
18:56
Speaker 1: we're going to litigate it. So if I were, they
18:59
Speaker 1: and my guess is Rich Parker and his team is
19:02
Speaker 1: ready to do that as well. I mean, the states
19:04
Speaker 1: must be stretched. They've got this, you know, Tegna merger
19:08
Speaker 1: that they're litigating, and that's that's a big deal. And
19:12
Speaker 1: they've got direct TV in with them, so that's helpful.
19:15
Speaker 1: But you know, they're not huge offices. I mean, California's
19:19
Speaker 1: a lot of people. But still this is big litigation.
19:23
Speaker 1: And of course the parties, I mean, they have infinite
19:26
Speaker 1: money to throw at this, so you know, they have
19:29
Speaker 1: to really be ready to say we've taken lots of depositions,
19:33
Speaker 1: we're ready to go. We don't have to do anything more.
19:35
Speaker 1: We're ready to litigate this on the merrits. So that's
19:39
Speaker 1: what I hope they're ready to do, because I think
19:41
Speaker 1: it's going to be really hard given that the second
19:44
Speaker 1: request was passed in February. I mean, maybe that's an
19:48
Speaker 1: argument that, well, they haven't been so quick to close it.
19:52
Speaker 1: Maybe they don't want to close it so quickly. There's
19:53
Speaker 1: a problem, maybe a problem with their financing.
19:56
Speaker 3: If they don't complete the merger by the thirtieth of September,
20:00
Speaker 3: Paramount has to pay Warner shareholders a twenty five percent
20:04
Speaker 3: share ticking feed, which amounts to six hundred and fifty
20:06
Speaker 3: million per quarter. The numbers are so big lately that
20:10
Speaker 3: it's like, is that a lot to them or not?
20:12
Speaker 1: Hey, it's a lot to me. I'm not sure that
20:15
Speaker 1: that stands in the way, you know, one way or
20:18
Speaker 1: the other. I mean, my guess is it's in their
20:21
Speaker 1: interest to get this merger going. I mean, they do
20:24
Speaker 1: want to do the merger. They fought so hard to
20:27
Speaker 1: get it that it's hard for me to imagine that
20:30
Speaker 1: it's in their interests to slow walk the litigation.
20:35
Speaker 3: Is any of that part of the litigation that the
20:39
Speaker 3: Justice Department made this decision because of politics, not because
20:43
Speaker 3: of law.
20:44
Speaker 1: I don't know how you litigate that in this context.
20:46
Speaker 1: It's not like Justice Department is prosecuting you and you're saying,
20:50
Speaker 1: you know that prosecution is politically motivated and we shouldn't
20:55
Speaker 1: have to answer your subpoenas. So I don't see how
20:59
Speaker 1: it's relevant, And it does strike me as something that
21:03
Speaker 1: would slow down the litigation, which I don't think the
21:07
Speaker 1: States would want. I don't know what they would achieve
21:11
Speaker 1: by slowing it down, unless they think that the financing
21:14
Speaker 1: would fall apart or the ticking fee would be so
21:17
Speaker 1: large that you'll walk away from the merger. It's hard
21:20
Speaker 1: for me to see Paramount walking away from this merger.
21:23
Speaker 1: They've invested money and political capital in this, and so
21:29
Speaker 1: that's hard to see too. So I don't see it.
21:32
Speaker 1: You know, you never know, but I mean I see
21:34
Speaker 1: a rather careful complaint. Actually not some political broadside.
21:39
Speaker 3: Would this be before a judge or a jury?
21:42
Speaker 1: So this is before a judge because you're not asking
21:46
Speaker 1: for money damages. You're asking for an injunction to stop something,
21:51
Speaker 1: so that that sort of remedy is an equitable remedy
21:55
Speaker 1: socided by a judge without a jury. So yes, this
21:59
Speaker 1: is before judge. You could in theory, and there have
22:02
Speaker 1: been cases where parties suffered damages from a merger, but
22:06
Speaker 1: this isn't that case, and states aren't asking for it.
22:10
Speaker 3: The Attorney general for California did it press conference in
22:14
Speaker 3: front of the Hollywood signs, So I think symbolically.
22:19
Speaker 1: Well, yeah, there may be politics going on, you know,
22:22
Speaker 1: the plaintiff side. It's uh, you know, it's certainly possible.
22:27
Speaker 1: But you know, the states have the constraint that the
22:30
Speaker 1: Feds don't. The states actually have to go into court
22:34
Speaker 1: and prove something before a judge who's got to by
22:38
Speaker 1: the law. So, you know, it's one thing when you
22:41
Speaker 1: can keep everything in a matter of discretion and throw
22:44
Speaker 1: your weight around and you know, sort of fire the
22:48
Speaker 1: people who want to enforce the law and do what
22:51
Speaker 1: you want and pay enough people, et cetera, and so forth.
22:55
Speaker 1: But the states, whatever their political goals, now have to litigate.
22:59
Speaker 3: It seems like the states have taken up the burden
23:02
Speaker 3: of antitrust regulation in the Trump administration.
23:05
Speaker 1: Well they have, and in a way that the need
23:10
Speaker 1: for them goes beyond what it had been at other times.
23:14
Speaker 1: So the states taking up the you know, antitrust enforcement
23:19
Speaker 1: when the Feds pull back, we've seen before, but never
23:24
Speaker 1: quite the pullback in this way. And there is one
23:28
Speaker 1: other thing that I didn't mention, and we don't know
23:31
Speaker 1: exactly how it'll fare. So in the past, you know,
23:36
Speaker 1: when the federal government says, you know, this merger is fine,
23:40
Speaker 1: and the states have to go into court, it is
23:42
Speaker 1: a problem in litigation because you know, federal judges normally
23:47
Speaker 1: think that the federal enforcers, you know, are enforcing the law.
23:51
Speaker 1: Know what they're doing. I think they're losing that asset
23:54
Speaker 1: the Justice Department, And you know, it's like case after
23:57
Speaker 1: case and certainly live nation ticket may is like here's
24:01
Speaker 1: your shining example where the Feds withdrawal and the States
24:04
Speaker 1: go on and litigate the case and win. So you know,
24:08
Speaker 1: I don't know that that closing statement, which is not
24:12
Speaker 1: extraordinarily persuasive given the case that's been filed, I don't
24:17
Speaker 1: know that it'll get that presumption either from a district
24:21
Speaker 1: court judge who looks at this history and says, you know, look,
24:25
Speaker 1: I know what's going on here. You know. Okay, that's
24:28
Speaker 1: what they say. But okay, States, you don't go to
24:31
Speaker 1: it and see if you can prove your case.
24:34
Speaker 3: Well, watch carefully for the motions that are bound to come.
24:37
Speaker 3: Thanks so much, Harry, as always, that's Professor Harry First
24:41
Speaker 3: of NYU Law School. Coming up, the impact of Senator
24:45
Speaker 3: Lindsay Graham's death on the Judiciary Committee. This is Bloomberg.
24:52
Speaker 3: Senator Lindsay Graham's desk in the Senate Chamber today is
24:56
Speaker 3: draped in a black shroud with a vase of white
25:00
Speaker 3: flowers atop it. Senate Majority Leader John Thune spoke on
25:03
Speaker 3: the Senate floor today.
25:06
Speaker 4: It's difficult to believe that Lindsey Graham is no longer
25:09
Speaker 4: here with us, that we won't run into him at
25:12
Speaker 4: Amenia Day or share a joke with him at this
25:16
Speaker 4: afternoon's vote. The halls of the Senate already feel empty
25:20
Speaker 4: without him.
25:21
Speaker 3: Republicans face an uncertain agenda after the death of the
25:25
Speaker 3: prominent seventy one year old senator, a committee chairman and
25:30
Speaker 3: Keith player who served as a crucial ally of President
25:33
Speaker 3: Donald Trump. He died Saturday after a tear in his aorda,
25:37
Speaker 3: according to a statement from his office. The unexpected death
25:42
Speaker 3: of the longtime Senate Judiciary Committee member leaves the panel
25:46
Speaker 3: without one of Trump's staunchest allies as Senator's Way Todd
25:51
Speaker 3: Blanche's attorney general nomination and other key picks. Joining me
25:55
Speaker 3: is Carl Tobias, a professor at the University of Richmond's
25:59
Speaker 3: School of Law. Carl Graham has been in the Senate
26:02
Speaker 3: for two decades. Tell us about his legacy.
26:06
Speaker 5: Well, it's huge in many ways because he was involved
26:11
Speaker 5: in so many different important tasks, especially in trying to
26:18
Speaker 5: legislate and pass legislation and work with his colleagues on
26:22
Speaker 5: both sides of the isle, but especially I think in
26:27
Speaker 5: the Judiciary Committee and on foreign policy of course, but
26:31
Speaker 5: in Judiciary he really was instrumental in working across the aisle.
26:40
Speaker 5: His great legacy will be in preserving the traditions of
26:45
Speaker 5: the Senate in terms of the blue slips, which protect
26:52
Speaker 5: the prerogatives of home state senators, and in protecting the
26:57
Speaker 5: filmbuster and against strong opposition from the White House in
27:04
Speaker 5: this administration and in the first Trump administration. So in
27:09
Speaker 5: that way he's been a great protector of the customs
27:14
Speaker 5: and traditions of the US Senate. And then, more specifically
27:17
Speaker 5: in the Judiciary Committee, did.
27:19
Speaker 3: He cross party lines in Judiciary Committee votes?
27:24
Speaker 5: In terms of Biden's appointees to the lower federal courts
27:29
Speaker 5: in his term, he was clearly the most vociferous proponent
27:36
Speaker 5: of those nominees, and only on rare occasions would he
27:41
Speaker 5: either choose not to vote or vote against them. And
27:45
Speaker 5: he was instrumental in bringing along other people and as
27:50
Speaker 5: I said before, honoring blue slips and the traditions of
27:54
Speaker 5: the Senate.
27:55
Speaker 3: So how do things change on the Senate Judiciary Committee
27:59
Speaker 3: with him absence, well, it.
28:02
Speaker 5: Still would be eleven to ten in terms of a
28:07
Speaker 5: party line vote if all the Republicans were to vote
28:12
Speaker 5: in favor of any nominee, and so those people would
28:16
Speaker 5: go to the floor and then likely have a party
28:21
Speaker 5: line vote there as well. So it would only be
28:25
Speaker 5: what I think, with someone very controversial, that there's much
28:30
Speaker 5: likelihood that people the President nominates would not get out
28:35
Speaker 5: of committee. But of course Graham had enormous influence over
28:39
Speaker 5: his colleagues on both sides of the eye, and so
28:42
Speaker 5: it may be much more difficult to secure agreements on
28:48
Speaker 5: controversial issues where it's necessary maybe to get some Democratic votes,
28:53
Speaker 5: especially on the floor.
28:55
Speaker 3: I mean, what are some of the votes that are
28:58
Speaker 3: upcoming that his absence may affect.
29:02
Speaker 5: Well, one huge one is the Save Act. There seem
29:07
Speaker 5: to be a number of Republicans who are opposed given
29:10
Speaker 5: the upcoming elections and protecting their seats and others where
29:16
Speaker 5: Republicans are the nominees. But that is one of the
29:21
Speaker 5: major losses and Trump even talked about that just the
29:25
Speaker 5: other night and that that was a huge loss for
29:31
Speaker 5: his efforts to push the Save Act, which he's championed
29:34
Speaker 5: for a long time. That is one of the major ones,
29:38
Speaker 5: but all kinds of other areas, of course, ranging from
29:42
Speaker 5: Ukraine to Israel, foreign policy matters, and then coming back
29:49
Speaker 5: to the Judiciary Committee, even on the day to day
29:52
Speaker 5: things like approving US attorneys and improving judges there, I
29:58
Speaker 5: think Graham could be very influential, and that's a great loss.
30:03
Speaker 3: President Trump's nominee to be the next Attorney General, Todd Blanche,
30:09
Speaker 3: is coming up this week for hearings, and Graham was
30:13
Speaker 3: a supporter of Blanche. Why do you think some people
30:16
Speaker 3: are saying that Graham's absence could affect Blanche's confirmation.
30:22
Speaker 5: Well, because of the enormous clout that he had and
30:26
Speaker 5: his ability to persuade people. So insofar as Republicans might
30:33
Speaker 5: be wavering on the floor, Lindsey, Graham could exercise a
30:39
Speaker 5: enormous influence over them and attempt to keep them voting
30:45
Speaker 5: in a way that would favor Blanche. And so we'll see,
30:49
Speaker 5: I mean, what happens on the Senate floor. But I
30:52
Speaker 5: still think if you come back to the committee, likely
30:54
Speaker 5: to be a party line eleven ten vote, depending on
30:58
Speaker 5: what we see in the hearing coming up. Wednesday.
31:01
Speaker 3: Sure to come up in those hearings is the so
31:03
Speaker 3: called one point eight billion dollar anti weaponization fund, which
31:08
Speaker 3: Blanche was behind. A judge wrote a scathing decision on Monday,
31:14
Speaker 3: saying that the IRS suit that led to the settlement
31:17
Speaker 3: was a bad faith attempt to manipulate the judicial system,
31:21
Speaker 3: and she wrote that she was extremely troubled by how
31:24
Speaker 3: Blanche had described the proceedings in congressional testimony and had
31:29
Speaker 3: ethical concerns about his involvement in the settlement given his
31:34
Speaker 3: past representation of Trump.
31:37
Speaker 5: I think you're exactly right the anti weaponization fund, and
31:43
Speaker 5: people forget the Tax of Unity agreement that he actually
31:49
Speaker 5: drafted and appended to the earlier deal. So both of
31:54
Speaker 5: those will be front and center and have been for weeks.
31:58
Speaker 5: And finally he said that it was dead, the anti
32:03
Speaker 5: weaponization fund, but Trump says he likes it and still
32:08
Speaker 5: wants it. And when Judge Brinckhama suggested that it'd be
32:13
Speaker 5: in writing from Blanche, it didn't happen. So that's a
32:17
Speaker 5: little bit in limbo. And I think that's likely to
32:20
Speaker 5: be front and center for Democratic members of the committee,
32:25
Speaker 5: especially Durban and Coons and white.
32:28
Speaker 3: House, so Blanche can't a fortune. Is any Republican votes
32:32
Speaker 3: in the committee?
32:33
Speaker 5: Yes, that's correct. Then you have to see who there
32:37
Speaker 5: is who might vote. Know, and I think people have
32:43
Speaker 5: looked at Tom Tillis from North Carolina and what he
32:48
Speaker 5: has had to say, but apparently had a very productive
32:51
Speaker 5: meeting with Blanche one on one last week and said
32:56
Speaker 5: things that were quite positive. So it's not clear. He
33:00
Speaker 5: has said that anyone who favors what happened on January sixth,
33:07
Speaker 5: twenty twenty one at the Capitol would be a red
33:11
Speaker 5: line that he could not cross. But he seems to
33:15
Speaker 5: have experienced a charm offensive from the acting Attorney General nominee.
33:23
Speaker 5: So we'll see.
33:24
Speaker 3: If Blanche's nomination gets out of committee. What about on
33:27
Speaker 3: the Senate floor? Was it just a simple majority?
33:31
Speaker 5: Yes? And if it's a tie, of course the Vice
33:35
Speaker 5: president can break that tie.
33:37
Speaker 3: So how many can they afford to lose?
33:39
Speaker 5: They now with McConnell out, who may be back or
33:43
Speaker 5: may not be back on that vote it was fifty
33:46
Speaker 5: three forty seven, it would be fifty one forty seven,
33:50
Speaker 5: which becomes pretty close.
33:53
Speaker 3: And how long after Todd Blanche's hearings will they vote
33:58
Speaker 3: on the nomination in the Judiciary Cause Committee.
34:01
Speaker 5: Usually it's about three weeks afterward, the Thursday, three weeks
34:06
Speaker 5: out from when the hearing is. I think they would
34:09
Speaker 5: like to get that done before they move on to
34:12
Speaker 5: August break, which will come on August sixth or so
34:16
Speaker 5: or August seven, and then they'll be out until after
34:20
Speaker 5: Labor Day. It's pretty tight scheduled to make that because
34:25
Speaker 5: there are others in the queue, and it depends on
34:28
Speaker 5: how many votes then can squeeze out, and then of
34:32
Speaker 5: course people may leave early.
34:34
Speaker 3: The governor is going to appoint Graham's sister, so does
34:38
Speaker 3: she automatically then go into Graham's seat on the Judiciary Committee.
34:45
Speaker 5: I think the short answer is no, and I think
34:47
Speaker 5: the long answer is no, partly because remember back to
34:53
Speaker 5: a very similar situation with Diane Feinstein just a couple
34:57
Speaker 5: of years ago, when she was sick and wouldn't resign,
35:01
Speaker 5: and ultimately she died, and they someone from California was
35:06
Speaker 5: then appointed and I think then took over her seat,
35:10
Speaker 5: but that went on for months. I think you need
35:14
Speaker 5: a vote on the Senate floor to approve that person.
35:18
Speaker 5: So I don't know that it will move that quickly
35:23
Speaker 5: or that she could be equipped to serve. I mean,
35:28
Speaker 5: I think the person who's substituted in for Feinstein was
35:32
Speaker 5: a lawyer, had considerable expertise, and so I don't know
35:36
Speaker 5: about Lindsey Graham's sister in that situation.
35:42
Speaker 3: So are there any judicial nominees that are in danger
35:46
Speaker 3: because of Graham's absence on the committee?
35:50
Speaker 5: I don't think so. Because of what we've been talking
35:55
Speaker 5: about about the numbers, it still will come out of
35:57
Speaker 5: committee if there are no Republican defectors at eleven ten.
36:03
Speaker 5: If it's a party line vote, Assuming so, it would
36:07
Speaker 5: have to be somebody who's very controversial, and there's been
36:12
Speaker 5: a lot of party line voting, especially on the appellate nominees,
36:16
Speaker 5: and so I will see. We can see this week. Actually,
36:19
Speaker 5: Matthew Schwartz for the second Circuit will probably have a
36:22
Speaker 5: vote on Tuesday. He had culture on party line vote.
36:27
Speaker 5: The same with the six Circuit nominee Benjamin Flowers, who
36:31
Speaker 5: also may be up this week. And there are some
36:34
Speaker 5: district nominees that I think they'll all go through.
36:37
Speaker 3: Certainly, the highlight will be the hearings over the nomination
36:42
Speaker 3: of Acting Attorney General Todd Blanche Thanks so much. Carl.
36:46
Speaker 3: That's Professor Carl Tobias of the University of Richmond School
36:50
Speaker 3: of Law. And that's it for this edition of The
36:52
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