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.
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, Paramount-Warner Bros. That will give them a hefty stake in CBS, CNN, Comedy Central, HBO and two historic Hollywood film studios.
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.
“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.”
Instead, “Ellison family will retain a majority of the voting interests and control of Paramount,” the FCC said.
FCC Chairman Brendan Carr, an appointee of President Trump, 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.
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. 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 $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.
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 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.
“We appreciate the FCC’s careful review and are pleased that it has granted Paramount’s petition,” Paramount said in a statement, adding the Trump administration’s Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector had separately recommended approval of the deal, subject to several conditions to protect the data of the company’s U.S. based consumers.
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.”
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.
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