FCC Signs Off on Middle East Investment in Paramount-Warner Bros. Deal

Logo text 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. 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 sovereign wealth funds are collectively providing roughly $24 billion in financing to help bankroll Paramount’s bid for Warner Bros. Discovery, according to SEC filings. For years, they’ve bankrolled global buyout firms, including Apollo Global Management, which is among the groups financing the offer. The deal was structured to provide capital through non-voting equity investments, meaning the funds don’t have any governance rights. In a statement, a Paramount spokesperson stressed that the deal will ultimately close. “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 studio will have greater access to capital, enabling it to compete more effectively in TV broadcasting, according to the decision. The approval follows a group of Democratic lawmakers in March sounding the alarm about foreign investors financing the merger. In a letter to the FCC, the senators called for a full probe over concerns that the Middle Eastern sovereign wealth funds would have influence over editorial decisions at CBS News and CNN. The FCC rejected the assertion, concluding that the investors “will not be able to wield any influence, let alone control, over decisions” involving Paramount and Warner Bros. Discovery. It added that the greenlight is “consistent with the Commission’s longstanding goal of promoting foreign investment, including in the broadcast industry.” The ruling comes with conditions designed to ensure that foreign investors can own a substantial share of Paramount without controlling the company or its broadcast operations. They’re barred from having any governance rights and cannot access nonpublic U.S. data, among other things. Violations of the conditions can lead to monetary sanctions and potential divestiture of the investments, according to the decision.