Three Democratic U.S. senators are asking the FCC to prevent the $111 billion merger between Paramount Skydance and Warner Bros. Discovery from being completed until the government completes a national security review of foreign investors involved in the deal.
In a June 18 letter to FCC Chairman Brendan Carr, Sen. Cory Booker (D.N.J.), Sen. Elizabeth Warren (D-Mass.), and Sen. Adam Schiff (D-Calif.) cited Paramount’s April 24 petition asking the FCC for a declaratory ruling to approve “significant foreign investments.”
Booker, Warren and Schiff asked the FCC to provide Paramount with “formal notice that the transaction may not close” by July 1 while the foreign investment review progresses.
Paramount disclosed in its filing that 49.5% of the combined Paramount and WBD will be owned by foreign investors, and approximately 38.5% of the new company’s stock will be owned by sovereign wealth funds from Saudi Arabia, Qatar and Abu Dhabi. Additionally, Paramount’s filing asked the FCC to allow up to 100% foreign ownership of broadcast licensees.
Congress established a 25% limit on direct foreign ownership of U.S. television and radio stations without prior FCC approval. “Under FCC rulemaking and procedures, the Commission must now coordinate with other executive branch agencies through the Commission on the Assessment of Foreign Participation in the U.S. Telecommunications Services Sector to assess the potential national security and foreign policy risks posed by foreign capital,” the senators wrote in a June 18 letter to Carr.
“The Commission has an obligation to honestly answer the fundamental question of whether it is in the interests of the American people to place 49.5 percent of the stock of the parent company of CBS, CNN, and 28 broadcast television stations into the hands of three foreign governments. We stand ready to pursue all available means, including legislative, oversight, and legal means, to ensure that.”
Variety has reached out to the FCC for comment.
Separately, on June 12, the Department of Justice’s Antitrust Division announced that it was closing its investigation into Paramount WBD without imposing any sale or other concession requirements on Paramount Skydance. Top Justice Department officials are moving to clear the Paramount-Warner Bros. Discovery deal before the team of lawyers investigating the matter issues recommendations, and those lawyers are “leaning” toward advising that the Justice Department sue to block the merger, The Wall Street Journal reported. Asked to comment on the Journal’s report, a Justice Department spokesperson said, “The Antitrust Division conducted a thorough investigation to assess whether the proposed transaction would harm competition. The investigation record shows that this transaction would promote competition across the media and entertainment ecosystem and benefit American consumers and workers.” In response to the WSJ report, Warren said in a statement: “The American people need to know whether this merger was approved as a political favor. This reeks of corruption.”
In March, Mr. Booker and six other Democratic senators sent a letter to Mr. Carr calling on the FCC to conduct a “thorough review” of foreign investments in the Paramount-WBD deal, expressing concern over Mr. Carr’s public comments that foreign investments warrant only a “very rapid, almost pro forma review.”
In a June 18 letter, the three senators wrote that “Paramount’s petition seeks much more than approval of a total foreign investment of 49.5%. “We are seeking prior approval to raise the stake to 20%, and if each sovereign wealth fund exercises that option, one of the country’s largest broadcasters could end up with up to 100% foreign ownership in total.” media company. ”
Although such pre-approvals are procedurally standard, “the nature of the request is unprecedented,” Booker, Warren and Schiff wrote. “We seek unrestricted approval for foreign government expansion into the parent company of CBS, CNN, and 28 broadcast television stations. Prior approval was never designed to authorize the transfer of control over one of America’s most important news organizations to a large foreign government-affiliated investor absent a finding that such transfer serves the public interest and does not threaten national security.”
Paramount Skydance said in an SEC filing that three Middle Eastern sovereign wealth funds “have agreed to waive any governance rights, including board representation, associated with non-voting equity investments.” The company claims the Ellison family and Redbird Capital Partners will have 100% control of the Paramount-Warner Bros. Discovery merger.
The senators said the FCC should deny Paramount’s request to “freely” allow up to 100% foreign ownership of Paramount Warner Bros. They wrote, “Paramount’s assertion that the deal ‘does not pose any national security, law enforcement, foreign policy, or trade policy concerns’ is not a legal determination that the committee can accept without scrutiny.”
The three senators said in a letter that Saudi Arabia’s Public Investment Fund is controlled by Crown Prince Mohammed bin Salman and that “U.S. intelligence agencies have concluded that he ordered the murder of Washington Post reporter Jamal Khashoggi.”
On April 29, the Department of Justice’s National Security Division notified the FCC that the Commission on the Evaluation of Foreign Participation in the U.S. Telecommunications Services Sector had begun reviewing Paramount’s petition for a waiver of foreign ownership rules. The timeline could take until late September for the committee’s review to be completed, followed by a second 90-day evaluation period if potential national security risks are identified, according to the three Democratic senators.
“Paramount’s stated intention to complete the transaction by July is completely inconsistent with its legally required national security review, which may not yet have begun,” the senators wrote in a letter to Carr. “Additionally, Paramount has publicly characterized the FCC filing as not a condition of closing, indicating the company’s intent to complete the acquisition before the Commission makes a public interest determination.”
In a letter to Carr, Carr, Booker, Warren and Schiff asked the FCC to confirm that a review by the Committee on the Evaluation of Foreign Participation in the U.S. Telecommunications Services Sector is underway and “provide a projected timeline for completion.” The senators also called on the FCC to “determine whether Attorney General (Todd) Blanche is chairing this review and, if he has not recused himself, identify the basis for his participation in a national security review with direct financial implications for sovereign wealth funds with documented ties to the Trump Administration.”
The full text of the senator’s letter can be found at this link.
