IN THIS ISSUE

FEDERAL FUNDING & OVERSIGHT

Warner Bros. Discovery Shareholders Approve $110 Billion Paramount Skydance Merger

• This Week in Regulation for Broadcasters: July 21, 2025 to July 25, 2025

On April 23, 2026, Warner Bros. Discovery shareholders approved a proposed $110 billion merger with Paramount Skydance. The transaction would combine major media and news assets, including CNN, HBO, and CBS, and is expected to close later in 2026 pending regulatory approval in the United States and internationally.

The deal will require approval from the Federal Communications Commission for the transfer of broadcast licenses. In its July 2025 approval of the Paramount–Skydance transaction, the FCC referenced the company’s elimination of DEI initiatives in its review of the deal.

See also: The Federal Communications Commission (FCC) Requires (and Verizon Provides) Disavowal of DEI Practices to Secure Merger Approval (Issue 13); FCC Pressures Companies to Drop DEI in Exchange for Merger Approval (Issue 21); Verizon-Frontier Merger Stalls as Federal Anti-DEI Mandates Collide with California Diversity Laws (Issue 28); FCC Pressures AT&T to Dismantle DEI Programs as Condition for Merger Approval, Expanding a Pattern of Regulatory Coercion (Issue 41)

COURTS & LITIGATION

Coalition Sues to Block EO 14398 Targeting Federal Contractor DEI Programs

• Trump order targeting DEI by federal contractors challenged in lawsuit 

OVERVIEW

On April 21, 2026, a coalition of civil rights organizations, nonprofits, and business groups filed a federal lawsuit challenging Executive Order 14398, “Addressing DEI Discrimination by Federal Contractors.” The lawsuit was filed just days before the order’s April 25 compliance deadline and seeks to block enforcement of provisions requiring contractors to certify that they do not operate DEI programs deemed inconsistent with federal anti-discrimination law.

Executive Order 14398 directs federal agencies to incorporate these certification requirements into contracting processes and authorizes enforcement actions, including contract termination, debarment, and potential liability under the False Claims Act for noncompliance. The order applies broadly to entities receiving federal funds through contracts and grants.

The complaint alleges that the order violates contractors’ rights under the First Amendment by restricting protected speech and association. Plaintiffs further argue that the policy wrongly treats DEI initiatives as unlawful discrimination and forces companies to choose between exercising constitutional rights and maintaining eligibility for federal contracts. The coalition is seeking injunctive relief to halt enforcement while the case proceeds.

LEGAL INTERPRETATION

The lawsuit challenging Executive Order 14398 raises constitutional and statutory questions regarding the federal government’s authority to impose DEI-related restrictions as a condition of federal contracting. The order requires contractors to certify that they do not operate DEI programs deemed inconsistent with federal anti-discrimination law and directs agencies to treat compliance with that certification as material to payment obligations.

The complaint challenges this structure, including the administration’s direction to use the False Claims Act as an enforcement mechanism, arguing that the executive branch does not have authority to designate compliance with an executive order as material under that statute. The White House has stated that the order is lawful and within presidential authority.

The claims build on prior litigation involving Executive Orders 14151 and 14173, where the U.S. Court of Appeals for the Fourth Circuit in February 2026 vacated a preliminary injunction after finding that plaintiffs had not demonstrated a likelihood of success on a facial constitutional challenge. The court’s decision allowed for the possibility of challenges based on specific enforcement actions where plaintiffs can demonstrate concrete harm.

Executive Order 14398 is expected to be implemented through federal acquisition regulations, including the incorporation of new contract clauses requiring certification of compliance in federal solicitations and agreements tied to the April 25, 2026 deadline.

BRIDGE POV

This lawsuit draws a clear line between enforcing civil rights law and redefining it through executive action. The plaintiffs are not challenging compliance with Title VII. They are challenging the administration’s attempt to recast lawful inclusion efforts as presumptively discriminatory and to enforce that position through federal contracting.

Civil rights law already defines what is unlawful. The complaint argues that Executive Order 14398 introduces a different standard without statutory grounding and then attaches that standard to contracts, certifications, and potential False Claims Act exposure.

This is not about whether companies should comply. They already are. It is about whether the definition of compliance can be expanded through contracting requirements rather than through law.

ACTIONABLE STRATEGIES

1. Differentiate Compliance from Policy
   Ensure internal alignment on what is required under existing civil rights law versus what is being introduced through executive action. That distinction should be clear in legal review and decision-making.
   
   

2. Document the Legal Basis of Programs
   Be explicit about how inclusion efforts are designed within Title VII and related statutes. Documentation should reflect intent, structure, and compliance with established law.
   
   

3. Align Contracting Representations with Legal Reality
   Where certifications are required, ensure they are grounded in verifiable legal compliance. Avoid broad or ambiguous language that could be interpreted beyond the scope of existing law.
   
   

See also: Federal Court Pauses Significant Portion of Trump's Executive Orders (Issue 1); Fourth Circuit Declines Facial Challenge to Anti-DEI Orders, Keeps Door Open for Future Legal Action (Issue 52); New Anti-DEI Order Targets Federal Contractors (Issue 58)