Paramount-WBD Merger Clears FCC Foreign Ownership Review
The FCC Paramount‘s proposed merger with Warner Bros. Discovery cleared an FCC review of its foreign ownership stake.
Paramount has disclosed that total foreign ownership of the combined company would be 49.5%, including 38.5% from investment funds from Saudi Arabia, Qatar and Abu Dhabi. Paramount had petitioned the FCC to sign off on the foreign investment, as any foreign ownership stake above 25% requires agency approval.
In its declaratory ruling, the FCC said that its believed that the “public interest would be served by granting the Petition.” Foreign owners are restricted from holding broadcast licenses, so the FCC had a role in the regulatory review of the transaction because of Paramount’s holding of CBS stations.
Paramount contends that the foreign investments do not pose national security, law enforcement, foreign policy or trade policy concerns. They noted that the Ellison family will retain a majority of the voting interests and control, while the foreign investors will not have voting control or governance.
The FCC ruling included a provision that the company said must obtain permission if “Paramount’s foreign voting interests in the aggregate exceed 25%, or if it proposes to change the voting interests of any of the approved Foreign Investors under this Declaratory Ruling.”
Anna Gomez, the sole Democrat on the FCC, along with Democrats on Capitol Hill, have raised issues about the foreign ownership stake in the transaction.
A Paramount spokesperson said, “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 noted that the ruling came after a national security review by the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector. Paramount submitted a letter of agreement related to protections for data and provisions that formalize restrictions on the rights and access of foreign investors.
More to come.
