LOS ANGELES, CALIFORNIA (Reuters) -Paramount Global's settlement of the "60 Minutes" lawsuit filed by U.S. President Donald Trump provoked condemnation on Wednesday from CBS News current and former employees, press freedom advocates and legislators.

Paramount's agreement to pay $16 million to resolve a civil suit over what Trump alleged was the network's deceptive editing of an interview with presidential candidate Kamala Harris sets a dangerous precedent that threatens the free press, journalism advocates warned.

One current "60 Minutes" employee who spoke with Reuters said that during a call Wednesday, newsroom staff expressed "widespread distress" about the settlement and concerns about the future of the CBS News prime time news magazine and its hard-hitting brand of journalism.

The staffer, who requested anonymity to speak publicly about his employer, said that while CBS News avoided the worst outcome in its settlement with Trump - an apology - the agreement nonetheless sets a "horrible precedent" in agreeing to make public transcripts of future interviews with presidential candidates. 

The settlement follows ABC News's decision in December to pay $15 million to settle a defamation lawsuit over anchor George Stephanopoulos's on-air description of the president's conduct in the E. Jean Carroll case.

"With two major network owners bowing to the president in quick succession, the danger is clear: emboldened politicians and powerful actors will feel more free than ever to weaponize lawsuits and bring regulatory pressure to bear to silence and censor independent journalism," said Tim Richardson, journalism and disinformation program director at free-speech advocate PEN America.

On Wednesday, U.S. Senator Elizabeth Warren called for an investigation into the settlement, which will be paid to a fund supporting Trump's future presidential library, said she will soon introduce legislation to "rein in corruption through presidential library donations."

$10 BILLION LAWSUIT

Trump filed the $10-billion lawsuit against CBS in October, alleging the network deceptively edited an interview that aired on its "60 Minutes" news program with then-vice president and presidential candidate Kamala Harris to "tip the scales in favor of the Democratic Party" in the election. In an amended complaint filed in February, Trump bumped his claim for damages to $20 billion.

CBS aired two different versions of Harris's response to a question about the Israel-Hamas war, according to the lawsuit filed in federal court in Texas. CBS previously dismissed the lawsuit as "completely without merit" and asked a judge to dismiss the case.

Steve Kroft, retired long-time "60 Minutes" correspondent called the settlement a "travesty" adding, "This is but the latest attempt by the Administration to damage the country's institutions and encroach upon the rights granted to the people under the First Amendment."

Rome Hartman, one of the producers on the Harris segment who retired from CBS two weeks ago, called the settlement "a cowardly capitulation by the corporate leaders of Paramount, and a fundamental betrayal of '60 Minutes' and CBS News."

Like other current and former staffers, Rome lays blame at the feet of Paramount controlling shareholder Shari Redstone, who needs Trump administration approval for its $8.4 billion merger with Skydance Media.

The Redstone family's payout for the sale of National Amusements, which holds the family's controlling stake in Paramount, will be about $1.75 billion, Reuters previously reported.

"They settled in order to preserve Shari Redstone's payday," Hartman said.

Paramount has said the lawsuit is "completely separate from, and unrelated to" the Skydance transaction and the pending FCC approval process.

CBS News co-CEO George Cheeks told investors during Wednesday's annual shareholder meeting that Paramount opted to settle the lawsuit to avoid the "unpredictable cost" of mounting a legal defense, and the possibility of an adverse outcome that would cause reputational damage." 

Paramount and CBS did not provide additional comment.

FCC Chair Brendan Carr, who was named chair by Trump on Jan 20, said last week the commission was continuing to review the transaction. The FCC did not make a decision by the 180-day informal deadline in mid-May.

INCREASED SCRUTINY

As the months-long legal standoff between Trump and Paramount dragged on, seven current and former journalists at "60 Minutes" said they have experienced heightened oversight over their work, including high-level executives sitting in on screenings, extensive review of any story touching on the Trump administration or the war in Gaza, and story lists being scrutinized at the highest level. However, no "60 Minutes" stories were blocked from airing.

"60 Minutes" lost a key ally in May, insiders said, when CBS News President Wendy McMahon, who defended the news organization from meddling, resigned, saying "it's become clear that the company and I do not agree on a path forward." 

She followed "60 Minutes" executive producer Bill Owens, who resigned in April after months of increasing oversight over the long-running newsmagazine, at the urging of Redstone, according to three people familiar with the matter.

"Today is a sad day for press freedom," said Jameel Jaffer, executive director of the Knight First Amendment Institute at Columbia University, who said he believes Paramount would have prevailed in court. "Now Trump's presidential library will be a permanent monument to Paramount's surrender, a continual reminder of its failure to defend freedoms that are essential to our democracy."