FCC Approves 49.5% Foreign Ownership of Paramount-Warner Bros.

The Federal Communications Commission on Thursday approved Paramount’s petition to allow 49.5% of its equity to be held by foreign entities once the Warner Bros. Discovery deal is complete.

Paramount owns 28 TV stations, and thus must get the FCC‘s approval for foreign ownership over 25%. Its acquisition of WBD is backed by three Gulf state sovereign wealth funds.

In approving the petition, the FCC dispensed with concerns over national security and improper influence, noting that the foreign funds — from Saudi Arabia, Qatar and Abu Dhabi — will not own voting stock.

“We are persuaded by Paramount’s argument that the Foreign Investors therefore will not be able to wield any influence, let alone control, over decisions involving the Licensees,” the commission’s decision states.

A Paramount spokesperson said Thursday that the company appreciates the FCC’s review of the matter, and noted that the Ellison family and RedBird Capital Partners will own 100% of the voting stock in the combined company.

“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,” the spokesperson said.

The merger is on hold pending the outcome of an antitrust suit filed in July by California and 11 other states. A trial is scheduled to begin next March.

Free Press, a media advocacy organization that has repeatedly raised alarms about the Trump administration, opposed Paramount’s request, arguing that foreign investors may well end up with a majority of the company’s equity.

“Control over for-profit, commercial domestic news media by any government is an extraordinary situation that would surely strike most Americans as unseemly, precisely because of the utility of the news media as a propaganda tool for those governments,” the organization wrote in its opposition.

A handful of Democratic senators also expressed concerns about the issue.

“The FCC has never approved a significant ownership stake of an American broadcaster by asovereign wealth fund — that is, an investment entity controlled by a foreign government,” wrote Sen. Maria Cantwell and others in May. “The plain text of the Communications Act prohibits ownership by ‘a foreign government or representative’ without regard to voting rights. And the FCC’s prior approval of foreign ownership of equity in broadcasters has been limited to entities based in allied NATO, Five Eyes, or friendly neighboring countries.”

Though the foreign funds will own 49.5% of the equity when and if the merger goes through, Paramount sought permission for them to own up to 100%, given the potential need for future investment. The commission approved the request, provided that Paramount must obtain further approval if the entities are to own voting shares.