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FCC Approves Foreign Ownership in Paramount-Warner Bros Merger
Confirmed
In Short: The FCC has allowed foreign investors to hold up to 49.5% of the combined Paramount-Warner Bros. Discovery company.
The Federal Communications Commission (FCC) has approved foreign investors holding up to 49.5% of the combined Paramount-Warner Bros. Discovery company, nearly twice the typical 25% threshold.
The approval came after a national security review by the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector.
Foreign investors, including sovereign wealth funds from Saudi Arabia, Qatar, and Abu Dhabi, will collectively provide $24 billion in financing for the $111 billion acquisition.
Paramount maintains that foreign investors will not have voting control or governance rights, ensuring the Ellison family retains majority control.
Critics, including Democratic senators Cory Booker and Maria Cantwell, have raised concerns about foreign influence over American media.
FCC Chairman Brendan Carr, an appointee of former President Trump, has been supportive of the deal, despite opposition from media advocacy groups like Free Press.
Background
Warner Bros. is a brand name that has been used by several multinational mass media and entertainment companies and corporations, mostly based in the United States, with attributions to Warner Bros. Pictures, a major American film studio founded on April 4, 1923, and the original namesake.
What's confirmed
- The Federal Communications Commission Sept. 17 issued an order enabling foreign investors to hold a 49.5% stake in the pending Paramount/Warner Bros. Discovery merged company.
- The ownership stake is almost twice the FCC’s statutory threshold of 25% for indirect foreign ownership in U.S.
- Of the foreign stake, 38.5% will held by three Middle East sovereign wealth funds.
- Cory Booker (D-N.J.), have written a letter to FCC Chairman Brendan Carr asking him to conduct a "thorough review" of Paramount's pending $111 billion acquisition of Warner Bros.
- The letter, written… The Federal Communications Commission appears set to approve Paramount Skydance's $110.9 billion acquisition of Warner Bros.
- In a decision released by the FCC's media bureau on Thursday, the commission said it was waiving the 25% cap on foreign equity ownership and said individual investors could own up to 20% of the equity.
- It also said foreign investors can have no voting stock and "will not have any influence, direction, or control over or provide any commentary or guidance on Paramount’s content decisions, company management," or access to non-public data on US citizens.
- Paramount praised the approval and said it followed a review by a US government committee of national security officials known as "Team Telecom" after ensuring that foreign investors will not have access to personal data of US citizens.
What's still developing
- Paramount had petitioned the FCC to sign off on the foreign investment, as any foreign ownership stake above 25% requires agency approval.
- Paramount submitted a letter of agreement related to protections for data and provisions that formalize restrictions on the rights and access of foreign investors.
- The Foreign entities don’t need voting control or governing because that is how how they operate.
- The FCC has signed off on equity investments from three prominent Middle East sovereign wealth funds that are backing Paramount ’s $111 billion acquisition of Warner Bros. Discovery, removing a potential regulatory hurdle to the company’s proposed acquisition.
- “When the proposed transaction with Warner Bros. Discovery closes, the Ellison family and RedBird will collectively hold the largest equity stake in the combined company and 100% of the voting shares, with no other equity participant having any governance rights,” the spokesperson said.
- In Thursday’s ruling, the FCC found that the public interest supports permitting Paramount’s foreign equity ownership to exceed the typical benchmark for such a deal.
- The Brendan Carr-led commission on Thursday approved Paramount’s petition to allow more than 25 percent of the studio’s ownership to be held by foreign investors, which include Saudi Arabia’s Public Investment Fund, the Qatar Investment Authority and Abu Dhabi Investment Authority.
- The approval follows a group of Democratic lawmakers in March sounding the alarm about foreign investors financing the merger.