23/03/2025
DEI Policy Concerns Places Paramount Merger at Risk with FCC
This week’s key terms/concepts:
• Federal Communications Commission (FCC): The US agency that regulates communications industries, including television, radio, and telecommunications.
• Diversity, Equity and Inclusion (DEI): The general corporate policies aimed at promoting diverse representation, fair treatment and equal opportunities in the workplace.
• Mergers and Acquisitions (M&A): The process of companies combining, a merger, or one company purchasing another, an acquisition, to expand business operations.
This week, Federal Communications Commission (FCC) Chairman, Brendan Carr, announced that the Commission is prepared to block mergers and acquisitions from firms which are still affirming diversity, equity and inclusion (DEI) policies, aiming to end forms of DEI discrimination which may classify as ‘illegal’. This follows the Trump administration’s recent position on phasing out DEI policies. In particular, Carr highlighted Paramount’s significant $8 billion merger with Skydance Media, as well as Verizon’s acquisition of Frontier as potential deals that could face roadblocks as a result of illegal DEI policies.
Why is this significant?
The FCC’s stance signals a potential turning point in how DEI policies are viewed in transactions such as high-profile merger and acquisition (M&A) deals, reflecting the increasing intersections of corporate governance, political considerations, social policies and commercial concerns in the law. A report by American data company FactSet revealed that US M&A deals have fallen 22.9% since the start of the year, and the FCC’s review suggests a continuation of this trend.
Paramount have filed a motion to dismiss a closely linked lawsuit over interview edits, with questions around whether a settlement would ease their regulatory issues for the merger.
How does this affect the legal sector?
Law firms will likely see an increase in demand for regulatory and compliance counsel, as companies will have to exercise caution with DEI policies and the heightened scrutiny that it may have on M&A transactions. Company policies will have to ensure that they are closer aligned with the FCC’s review of illegal policies, as well as balancing regulatory compliance with the company’s own diversity goals.
Firms may also see a demand for litigation risk with companies challenging regulatory scrutiny in court. Paramount’s motion to dismiss suggests that companies are willing to challenge in court, despite increasing pressure to shift corporate strategies.
Paramount is currently awaiting the FCC’s review after initially anticipating the transaction to close by the end of June.
Lex Weekly 