FCC Clears Saudi, UAE and Qatari Stakes in Paramount-Warner Bros. Deal
Saudi Arabia's PIF, Abu Dhabi's L'IMAD and Qatar's QIA may hold non-voting Class B shares equal to 38.5% of Paramount, with control staying with the Ellison family and RedBird.
Tariq Benali Tariq Benali covers business and corporate news across the UAE and MENA for Anecdoted, tracking the deals, leadership moves and regulatory shifts behind the region's companies. tariq@anecdoted.com
The Federal Communications Commission on Thursday cleared foreign investment in Paramount Skydance's $110 billion acquisition of Warner Bros. Discovery, allowing sovereign funds from Saudi Arabia, the United Arab Emirates and Qatar to take substantial non-voting positions in the combined company.
The FCC's Media Bureau waived the 25% benchmark that normally limits foreign equity ownership in Paramount, and approved investments by three named funds: Saudi Arabia's Public Investment Fund, Abu Dhabi government-linked L'IMAD Holding and the Qatar Investment Authority.
Paramount has said the three sovereign wealth funds would hold 38.5% of its equity between them once the transaction closes. The commission approved PIF for an indirect stake of 15.1%, four entities tied to L'IMAD at 12.8% each, and two Qatar-linked entities, QIA among them, at 10.6% each.
Non-voting shares and a future ceiling
Every one of those positions sits in non-voting Class B stock. The FCC also gave each approved investor advance clearance to lift its indirect holding as high as 20% later on, as long as the stake stays non-controlling.
Voting power does not move. Paramount said the Ellison family and RedBird Capital Partners will keep 100% of the voting shares and control of the combined company, and the FCC found the foreign money would not produce a transfer of control.
The approval carries conditions. Foreign investors receive no voting, governance or information rights. They cannot influence Paramount's content decisions or its management, and the limits apply to each of the approved investors. They are also barred from reaching non-public data about people in the United States.
National security review
The decision came after a national security and law-enforcement review by the Committee for the Assessment of Foreign Participation in the US Telecommunications Services Sector, commonly called Team Telecom. That group raised no objection, provided Paramount abides by safeguards it agreed with US officials.
Antitrust case still pending
The FCC action is separate from the courtroom fight over the merger, which continues in a US court. A coalition of 12 states is contesting the deal on antitrust grounds, and a trial is scheduled for March. The Justice Department has already cleared it.
The ruling also permits aggregate foreign equity ownership in Paramount of up to 100%, subject to the commission's rules and to the conditions placed on the company.
Paramount has said the capital gives it more room to compete in media and entertainment, and that putting the two studios together would create the scale to invest, innovate and deliver content around the world.
