FCC approves foreign owners for a merged Paramount-Warner Bros.
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The Federal Communications Commission on Thursday granted Paramount Skydance’s request to allow Middle Eastern royal families to hold a substantial stake in a merged Paramount-Warner Bros. Discovery.
Foreign investors, including the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi, are slated to indirectly own nearly 50% of the equity in David Ellison’s proposed mega-studio. That will give them a hefty stake in CBS, CNN, Comedy Central, HBO and two historic Hollywood film studios.
Paramount also asked the commission, led by President Trump’s appointee Brendan Carr, to allow the foreign investors to eventually take on an even bigger stake because the company expects that it will need more capital to run the merged entity after closing the highly leveraged deal.
The FCC’s Media Bureau granted Paramount’s petition. Ellison needed FCC approval because the deal will change the ownership structure of CBS.
As part of the Communications Act of 1934, Congress placed restrictions on foreign ownership of broadcast outlets because of concerns about national security. Current rules prevent foreign investors from owning more than 25% of a company that holds a U.S. broadcast license — unless the FCC determines that foreign ownership would serve a public interest.
CBS owns more than two dozen TV stations with FCC licenses, including KCBS-TV Channel 2 and KCAL-TV Channel 9 in Los Angeles.
Royal families from Saudi Arabia, Qatar and Abu Dhabi would contribute $24 billion to the Larry Ellison bid.
“Upon review of [Paramount’s] Petition and consideration of the record of this proceeding, we find that the public interest would be served by granting the Petition,” FCC said in its ruling, noting that Paramount has said the proposed ownership changes would “not result in a transfer of control of Paramount.”
The Ellison family will “retain a majority of the voting interests and control of Paramount,” the FCC said.
“The foreign investors will not have any influence, direction, or control over or provide any commentary or guidance on Paramount’s content decisions, company management, or have any access to Paramount’s non-public U.S. person data,” the FCC said in its order signed by David Brown, chief of the video division.
Carr, the FCC chairman, has been supportive of Paramount’s takeover of Warner Bros. Trump and his lieutenants, including Defense Secretary Pete Hegseth, have been cheering for Ellison to control CNN, a Warner property.
Los Angeles’ identity and workers’ livelihoods are at stake, say worried residents who fear that Paramount will leave the state.
Several groups, including the 1st Amendment nonprofit Free Press, asked the FCC to consider additional safeguards to shield the news organizations — CNN and CBS — from foreign control. One suggestion was to spin off CBS and CNN into a subsidiary that would be wholly owned by Americans.
Paramount and the FCC were dismissive, arguing “the concerns raised in the record ... are speculative and unsupported,” according to the FCC ruling.
The three-member commission did not vote on Paramount’s petition. Instead, it was approved by the Media Bureau, which is under Carr’s control.
Anna M. Gomez, the lone Democratic FCC commissioner, slammed the agency’s decision, saying it “just let some of the most repressive governments in the world indirectly control nearly all of a combined Paramount-Warner Bros.”
“An investment this large in one of America’s biggest media companies doesn’t just buy equity, it secures influence over what gets said and what gets made,” Gomez said. “That’s why I called for this new and novel issue to go to a full commission vote given what’s at stake. Instead, the FCC snuck this ruling out as a staff-level decision, with no public vote and no accountability for a call of this magnitude.”
Ellison’s billionaire father, Oracle co-founder Larry Ellison, in February agreed to personally guarantee the $47 billion in equity needed to buy out Warner Bros. Discovery’s existing shareholders for $81 billion. Ellison and longtime Skydance investor, RedBird Capital Partners, then entered into agreements to assign some of their purchase rights to the sovereign wealth funds.
The funds plan to invest at least $24 billion in the Paramount-Warner deal. Saudi Arabia’s Public Investment Fund is set to contribute $10 billion while the Qatar Investment Authority and Abu Dhabi’s L’imad Holding Co. will separately add $7 billion.
Additional foreign investors are expected to chip in, and Qatar and the United Arab Emirates could bolster its stake in Paramount-Warner Bros.
Paramount has separately lined up debt financiers to help pull off the leveraged buyout of Warner Bros. Discovery — Hollywood’s biggest merger in decades. The deal has been stalled by an antitrust challenge brought by California Atty. Gen. Rob Bonta and 11 other Democratic attorneys general, representing such states as New York, New Jersey, Colorado, Nevada and Oregon.
The groups say they need to look at Paramount’s internal documents, citing Delaware law.
The foreign ownership rule was adopted nearly a century ago because members of Congress wanted to make sure that hostile foreign players were barred from using U.S. airwaves to spread propaganda, particularly in times of war.
Paramount said that, once the deal closes, the Ellison family and RedBird would “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.”
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Paramount has two classes of stock — an ownership structure that will be replicated in a merged Paramount-Warner Bros.
The Ellison family owns 77.5% of Paramount’s voting Class A common stock. RedBird indirectly holds the remaining 22.5% of the Class A shares. The Ellison family separately has 40% of the non-voting Class B shares.
“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,” Paramount said in its statement.