Former CNN host Don Lemon is suing X (formerly Twitter) and its billionaire owner, Elon Musk, over a ridiculous canceled deal. Here’s everything we know about the case and the potential impact it could have.

For context, in April 2023, CNN fired Lemon after his brief but controversial stint as a morning show host where he made some sexist remarks about Nikki Haley. Meanwhile, after his unceremonious exit from CNN, where he served for 17 years, Lemon signed a deal with X earlier this year.

As part of the deal, Lemon was supposed to get $1.5 million, a 60% share of gross advertising revenues from his show on X, $500,000 in advertising credits on X, and additional incentives which were contingent upon his account gaining more followers. Importantly, according to the deal, Lemon was to have full ownership of any content that he created for X.

Lemon Sues X After His Show Was Canceled

Musk was supposed to be the first guest on the “The Don Lemon Show.” However, the conversation between the two did not go as planned, and Musk was quite agitated by Lemon’s questions. He was particularly perturbed by his questions about the billionaire’s open use of the prescription drug ketamine, as well as rising instances of hate speech, including antisemitism on X.

During the interview, Musk told Lemon, “I don’t have to answer questions from reporters.” He told him that “the only reason I’m doing this interview is because you’re on the X platform and you asked for it. Otherwise, I would not do this interview.”

A day after that interview, Musk sent a message to Lemon’s agent saying, “contract is cancelled.” Lemon has now filed a lawsuit against him as well as X.

Lemon Alleges He Was Cheated

In his lawsuit, Lemon said that amid the flight of advertisers from the platform, X was looking to affiliate with “reputable figures” and bank on their reputation to lure back advertisers. The suit adds that Lemon was “vulnerable” after his exit from CNN and was apprehensive about signing an exclusive deal with X.

It says that the company induced “Lemon through false promises and representations about what would be expected of them and how much Lemon would be compensated to get him to agree, all while concealing material facts from Lemon.” According to Lemon’s lawyer Carney Shegerian, “X executives used Don to prop up their advertising sales pitch, then canceled their partnership and dragged Don’s name through the mud.”

Notably, both Musk and X’s CEO Linda Yaccarino welcomed Lemon to the platform publicly. According to Lemon, he spent considerable time and “hundreds of thousands of dollars” towards establishing his media company for the show.

Lemon said that Musk told him that he would have “full authority and control over the work he produced even if disliked by Defendants and that there would be no need for a formal written agreement or to “fill out paperwork.”

X Has Faced Multiple Controversies Since Musk Acquired the Company

To be sure, this is the latest controversy to hit X since Musk acquired the company in 2022, and we can be quite certain that it is not the last either.

While the Tesla CEO has been trying to turn around the company and make it sustainably profitable, so far the company has been in the news mostly for the wrong reasons. It has been in the news for unpaid rents and other dues and is facing multiple lawsuits. – including from several former employees.

His antics have lost him quite a bit of support from users and advertisers alike. He has struggled to convince advertisers to stay on the platform ever since.

Musk tried shifting the focus away from advertising to subscription and X started offering paid subscriptions as well as started charging for APIs.

None of these strategies paid off and advertising continues to remain the bread and butter for X – just as it was before Musk acquired the company. At the Deal Book conference last year, Musk warned that X might fail because of the boycott from advertisers.

X’s valuations have also plummeted amid the falling revenues, and most recently, Fidelity valued the company at a mere $12.5 billion which is considerably below the $44 billion valuation at which Musk acquired it for.

Musk’s “Free Speech Absolutism” Under a Microscope

While acquiring Twitter, Musk self-proclaimed himself as a “free speech absolutist.” However, critics say this is far from the truth, pointing to increasing compliance with government censorship requests as well as other incidents like the sit-down with Lemon. Even during Tesla’s earnings calls, Musk has often sought to bypass tough questions from analysts, and in 2018 he famously (or infamously) said, “Bonehead questions are not cool.”

More recently, he has threatened to sue an alliance that counts some of the world’s biggest companies as its members over the “advertising boycott racket.” In an ideal world, boycotts would also be a form of “free speech” that Musk was looking to protect by acquiring Twitter.

Several other of Musk’s actions like banning accounts he does not like, go against the principles of free speech.

Musk Seems to Be Having Afterthoughts on the Deal With Lemon

Meanwhile, Musk canceling Lemon’s show is hardly the first time the mercurial billionaire has had afterthoughts. While Lemon’s interview with Musk, where the former CNN anchor asked him some tough questions, looks like the trigger for the show’s cancelation, the deal looks quite unfavorable to X at first sight.

On a similar note, Musk tried walking away from the deal to buy Twitter also. Musk’s offer price of $54.20 per share was a massive premium to Twitter’s then price and in a typical “buyer’s remorse” he walked out of the deal. Twitter, meanwhile, was in no mood to let the billionaire walk away easily and sued him for “specific performance” – and asked him to buy the company at original terms.

In a BBC interview (linked above) Musk – who rued that he overpaid for the social media company – admitted that he bought Twitter as he thought courts would force him to do so.

It looked like a tough legal battle for Musk and most legal experts believed he stood little chance of winning. Musk agreed to buy Twitter at the original terms and settled the case.

Will the Court Rule in Lemon’s Favor?

As for the cancelation of the deal with Lemon, it remains to be seen which way the court rules as it seems like there is no paperwork to back Lemon’s claims. As for X and Musk, it looks like endless controversies will continue to plague the site if it remains on this path.

Meanwhile, these recurring controversies only seem to be widening the gulf between Musk fans and critics. While there have always been plenty of people on both sides, Musk’s popularity has gradually been rising, especially with conservatives, as is evident in his rising X followers. Last year, he surpassed former US President Barrack Obama in terms of followers and the count has now swelled to nearly 200 million (though many are surely bots or duplicate accounts).

News of Musk not honoring his word in the deal with Lemon might not do much favor to Musk who is trying to get advertisers back on X. For his supporters though, the controversies only seem to make them like him more.