FCC Approves Gulf Funds' Indirect Stake in Paramount-Warner Merger

The U.S. Federal Communications Commission (FCC) has approved Paramount's request for indirect ownership stakes from sovereign wealth funds in Saudi Arabia, Qatar, and the United Arab Emirates, as the company pursues its acquisition of Warner Bros. Discovery. The Thursday ruling permits these funds to hold equity interests but not voting stakes in the combined entity.

Skydance-owned Paramount, which is currently seeking to merge with Warner Bros. Discovery in an $81 billion deal, has secured billions in financial backing from the Gulf nations. The FCC's decision allows these funds to participate financially, a move Paramount stated will provide the necessary scale and resources to compete globally. Paramount has asserted that these investors will not possess any governance rights, with the family of CEO David Ellison and RedBird Capital retaining majority ownership.

However, critics have expressed concerns about the significant foreign financial involvement. FCC Commissioner Anna Gomez, the sole Democrat on the commission, publicly decried the decision, calling it an indirect control by "some of the most repressive governments in the world" over core news operations like CBS and CNN. She argued that such substantial investments "don’t just buy equity, it secures influence over what gets said and made."

Paramount operates under FCC oversight due to its ownership of CBS and numerous broadcast television affiliates across the U.S. The Public Investment Fund of Saudi Arabia, L’imad Holding Company in the UAE, and the Qatar Investment Authority reportedly committed approximately $24 billion to aid in the Warner acquisition. Paramount's petition to the FCC disclosed that these funds were expected to indirectly hold nearly 50% of equity interests upon the merger's closure, exceeding the 25% threshold that requires FCC approval. The commission granted clearance for up to 100% indirect equity interests to accommodate potential future investments.

David Brown, chief of the FCC’s Media Bureau video division, concluded that increased capital access for Paramount would strengthen the broadcast industry and was "in the public interest." He stated his team was persuaded by Paramount's assurances that foreign investors would not be able to influence decisions regarding its broadcast stations.

Gomez had previously raised alarms about the potential influence of foreign governments with records of press suppression, specifically mentioning Saudi Arabia's Public Investment Fund. She criticized the FCC's decision to issue the approval as a staff-level ruling rather than a full commission vote, citing a lack of accountability.

Lawmakers, including Democratic Senators Elizabeth Warren and Maria Cantwell, have also voiced concerns. In May, they sent a letter to FCC Chairman Brendan Carr highlighting potential foreign government influence in American news media. Carr, appointed by Republican President Donald Trump, has generally supported the Paramount-Warner merger, suggesting the FCC's role would be minimal.

The $81 billion merger remains on hold due to a separate antitrust lawsuit filed by twelve states and the Writers Guild of America, which argues the combination would stifle competition and reduce consumer choice. Paramount has agreed not to close the merger until the legal challenges are resolved, with a trial scheduled for March. Despite these hurdles, the FCC's approval of the Gulf funding provides a significant financial infusion for the deal, which, including debt, is valued at nearly $111 billion.