FCC approves Paramount foreign ownership request tied to Gulf investment
The FCC has cleared non-voting foreign equity in Paramount under conditions, while the Warner Bros. Discovery deal remains in litigation.
By Dominic Okoye · Staff Writer
· 3 min read
The FCC has approved Paramount Skydance’s request to exceed the usual foreign-ownership threshold for broadcast licensees, clearing a structure under which foreign investors are expected to hold 49.5% of the company’s equity. The FCC Paramount foreign ownership approval applies to indirect, non-voting holdings and does not complete Paramount’s proposed $111 billion acquisition of Warner Bros. Discovery, which remains subject to litigation.
The declaratory ruling was issued by the FCC’s Media Bureau rather than put to a commission vote, Ars Technica reported. Paramount owns and operates 28 local CBS stations, whose licenses trigger FCC review when direct or indirect foreign ownership exceeds 25%.
The company said its projected 49.5% figure reflects aggregate foreign ownership under its current transactions. That is broader than the stakes held by the three Gulf-linked investors named in the proposal. Variety previously reported that sovereign wealth funds associated with Saudi Arabia, Qatar and Abu Dhabi would account for about 38.5% of the merged company’s equity.
What did the FCC approve for Paramount’s foreign investors?
The ruling permits up to 100% aggregate indirect foreign equity interest in Paramount, subject to conditions. Paramount told regulators that actual foreign ownership could move from its current 49.5% expectation as publicly traded holdings fluctuate or new investments are made.
Saudi Arabia’s Public Investment Fund, the Qatar Investment Authority and Abu Dhabi’s L’imad Holding Co. are expected to invest in the Paramount-Warner transaction. Ars Technica, citing the Los Angeles Times, reported a planned $24 billion commitment: $10 billion from the Saudi fund and $7 billion each from the Qatari and Abu Dhabi investors.
The approval does not transfer voting control. The Ellison family and RedBird Capital Partners are to retain all Class A voting shares, while the foreign investors would receive Class B non-voting shares. Variety reported that Paramount said the three sovereign funds had also agreed to forgo governance rights, including board representation, connected to those investments.
Limits on content, management and data access
The Media Bureau accepted Paramount’s assertion that non-voting shareholders would lack the ability to affect editorial decisions, programming or viewer data. It rejected objections that the investments could nonetheless create practical influence over the licensed stations.
Its order requires Paramount to monitor foreign ownership and bars the foreign investors from influencing, directing or offering guidance on content and management decisions. They also cannot access Paramount’s non-public data about U.S. persons. Paramount must return to the FCC before changing the investors’ voting, governance or information rights, or before exceeding the order’s terms.
The decision drew opposition from FCC Commissioner Anna Gomez, the commission’s sole Democrat, who argued that an investment of this scale could create influence over a major U.S. media company and should have received a full commission vote. Senate Democrats had separately raised concerns about investment by foreign governments in the parent of CBS, CNN and local broadcast stations.
For Paramount, the ruling removes one regulatory condition for its Warner Bros. Discovery plan. It does not resolve the states’ legal challenge to that transaction, which Ars Technica reported had halted the deal after a federal judge found it was likely to substantially lessen competition and violate antitrust law.
This story draws on original reporting from Ars Technica.
