The Federal Communications Commission has greenlit Paramount’s petition to allow foreign investors to own at least 49.5 percent of its equity—should the media behemoth successfully acquire Warner Bros. Discovery.
The titanic buy-out is backed by three sovereign wealth funds tied to Saudi Arabia, Qatar, and Abu Dhabi. The FCC acknowledged the national security concerns behind the foreign investment, noting in their decision that the Gulf State wealth funds would not have voting stock.
“We are persuaded by Paramount’s argument that the Foreign Investors therefore will not be able to wield any influence, let alone control, over decisions involving the Licensees,” the commission’s 20-page decision read.
Nonetheless, the commission also carved out allowances for foreign investors to own all of the company’s stock, writing that “it is in the public interest to permit up to 100 percent indirect foreign equity interest of Paramount.”
The combined permitted equity sums include 51.2 percent for four UAE investors, 21.2 percent for two Qatari investors, and 15.1 percent for a singular Saudi investor. Altogether, that’s 87.5 percent of the joint entity.
The FCC’s observed national security concerns did not, however, extend to the three nations’ authoritarian rule, or the consequences of speaking freely under their control.
The prospect of the multi-billion dollar deal was apparently delicious enough for U.S. officials to forget about the late Washington Post columnist Jamal Khashoggi, who was assassinated by the Saudi government in 2018 for daring to question the kingdom’s authoritarian rule and its war in Yemen, and for advocating for democracy in the Middle East.
A Paramount spokesperson said in a statement that the company appreciated the FCC’s “careful review,” and specified that the “Ellison family and RedBird [Capital Partners] will collectively hold the largest equity stake in the combined company and 100 percent of the voting shares, with no other equity participant having any governance rights.”
“At a time when the media industry faces unprecedented competitive pressure from dominant big tech companies, a combined Paramount-WBD will have the scale and resources necessary to compete, invest, innovate, and deliver premium content to audiences worldwide,” the spokesperson added.
Paramount Skydance came to an agreement to acquire Warner Bros. Discovery earlier this year when it undermined a previous deal between Warner Bros. and Netflix by offering an all-cash bid to buy the company with $31 per share.
But the $110 billion transaction hit a snag in July when a federal judge temporarily blocked the agreement from moving forward, citing antitrust concerns as the two corporations stand to dominate America’s media landscape.
If approved, the merger would fuse two gargantuan film studios, two streaming platforms, and two news organizations under the helm of David Ellison, the millennial son of tech billionaire Larry Ellison, who’s a close friend of Donald Trump.
The ongoing pause has put Paramount executives in a bind: the company placed a bet against time, promising Warner Bros. shareholders 25 cents a share each quarter if the deal isn’t wrapped by September 30. That could potentially penalize Paramount by more than $600 million per quarter.
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