Paramount Seeks FCC Approval for Middle East Investment in Warner Deal

Paramount has requested approval from U.S. regulators for foreign investment related to its ambitious $111 billion acquisition of Warner Bros. Discovery. This request was submitted to the Federal Communications Commission and reported through industry sources, along with a filing signed by Paramount’s legal chief, Makan Delrahim.

The company aims to secure funding from three significant sovereign wealth funds in the Middle East, including Saudi Arabia’s Public Investment Fund, a fund from Abu Dhabi, and Qatar’s Investment Authority. This investment is intended to bolster the overall deal structure without altering control of the company.

In its filing, Paramount emphasizes that control will remain with David Ellison, Larry Ellison, and RedBird Capital, who will retain all voting power. The foreign investors will only receive non-voting shares, ensuring they do not influence company decisions.

The filing also indicates that nearly half of Paramount’s equity could be held by foreign investors after the deal’s completion, with estimates suggesting this figure could reach around 49.5 percent.

Paramount is also requesting the FCC’s broad approval to allow foreign ownership of up to 100 percent of equity or voting interests. The company describes this as a routine procedural step related to regulatory review, rather than an intention to modify the ownership structure.

A spokesperson for Paramount stated that this filing is a standard requirement for transactions of this nature. They highlighted that the approval process is distinct from the main acquisition, which has already received the green light from Warner Bros. Discovery shareholders.

The spokesperson further clarified that once the deal closes, the Ellison family and RedBird Capital will maintain control over voting shares and governance, with foreign investors lacking voting rights or board representation.

Reports suggest that the three sovereign wealth funds are expected to contribute approximately $24 billion in funding. The FCC filing details the anticipated stakes post-completion, with the Saudi fund projected to hold the largest share at 15.1 percent, followed by Abu Dhabi at 12.8 percent and Qatar at 10.6 percent. Collectively, these funds would represent about 38.5 percent of the company’s equity, again without voting power.

Paramount is also engaged in discussions with a U.S. government advisory group that evaluates foreign involvement in the telecom and media sectors for security concerns.

In his filing, Delrahim argued that attracting foreign capital would enhance Paramount’s operations, supporting local news, improving technology, and expanding programming. He cited sports rights deals as an example of how this investment could be utilized.

Delrahim wrote, “Reducing barriers to further investment in Paramount, including by allowing the company to pursue additional capital from non-U.S. investors, will enable it to allocate additional resources to preserve and enhance the legacy and broad reach of the Licensees’ television broadcast operations.”

He added that stronger investment could enhance the company’s competitiveness in the evolving media landscape and help address the challenges faced by traditional broadcasters.

From a broader perspective, this significant media deal hinges not only on company approvals but also on government scrutiny. The involvement of substantial foreign funds adds further attention to the regulatory process. It will be intriguing to observe the FCC’s response and whether any conditions are imposed.

What are your thoughts on major media companies relying on foreign investment like this? Share your opinions in the comments.