The Federal Communications Commission (FCC) has approved Paramount’s request to allow indirect foreign equity ownership in the company to exceed the 25 percent benchmark normally applied to the U.S. parent companies of broadcast licensees.
In a declaratory ruling released Thursday, the FCC’s Media Bureau authorized up to 100 percent aggregate indirect foreign equity ownership in Paramount, subject to agency rules and national security conditions negotiated with the U.S. government.
The request was made by Paramount last year, shortly after the company announced its intention to acquire rival entertainment company Warner Bros Discovery (WBD). Paramount intends to use foreign investments to help bankroll its acquisition effort, which currently faces a multi-state legal challenge.
Paramount told the FCC that existing and prospective foreign investors are expected to hold approximately 49.5 percent of its equity following the investment.
The ruling specifically approves Saudi Arabia’s Public Investment Fund to indirectly hold 15.1 percent of Paramount’s equity. Entities connected to Abu Dhabi-based L’Imad Holding were approved for a 12.8 percent interest, while QIA TMT Holding and the Qatar Investment Authority were approved for 10.6 percent.
Each investor also received advance approval to increase its indirect equity stake to as much as 20 percent without obtaining another declaratory ruling.
The shares will be non-voting. Paramount Skydance’s Class A shares, which carry all voting rights, will remain controlled by the Ellison family and RedBird Capital Partners. The FCC said the proposed investment does not constitute a transfer of control.
Approval is conditioned on Paramount complying with a September 4 Letter of Agreement reached with federal national security officials. Under that agreement, the foreign investors cannot receive governance or information rights and cannot influence Paramount’s content decisions, company management or access non-public data involving U.S. persons.
Paramount must return to the FCC before changing those restrictions or granting the foreign investors voting rights.
Paramount was required to receive approval from the FCC because of rules that limit foreign ownership of companies that hold broadcast TV and radio licenses. Paramount operates more than two dozen licensed TV stations through its CBS News & Stations division and is not expected to divest that business through its acquisition of WBD.
The FCC said the arrangement would provide Paramount and its broadcast stations with greater access to capital while maintaining safeguards against foreign influence. The agency rejected objections arguing that the investment could create practical influence over Paramount’s broadcast and news operations, concluding that the non-voting structure and government-imposed conditions sufficiently addressed those concerns.
The Media Bureau’s approval has already invited criticism from one FCC Commissioner, Anna Gomez, who on Thursday renewed her call for a full commission vote on the matter.
“The FCC 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,” Gomez said in a statement e-mailed to The Desk.
She continued: “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.”
