FCC OKs PSKY's Foreign Investment, But Denies Voting Stock

The Federal Communications Commission on Thursday waived the 25% foreign-ownership cap so Paramount Skydance can use overseas capital to fund its $110 billion takeover of Warner Bros. Discovery, but barred those investors from holding voting stock or influencing the company’s content, management, or U.S. customer data.

The Media Bureau said individual foreign investors may own up to 20% of Paramount’s equity. It also said they “will not have any influence, direction, or control over or provide any commentary or guidance on Paramount’s content decisions, company management,” and will not get access to non-public data on U.S. citizens.

Reuters reports the ruling follows a Team Telecom national-security review. 

Paramount praised the decision and said a combined company would have “the scale and resources necessary to compete, invest, innovate, and deliver premium content to audiences worldwide.”When the deal closes, the family of Oracle co-founder Larry Ellison and RedBird Capital Partners would hold the largest equity stake and 100% of the voting shares. No other equity participant would have governance rights.

The FCC said Middle Eastern investors could own about 85% of Paramount’s equity after closing, including 15.1% for Saudi Arabia’s Public Investment Fund. Paramount said sovereign wealth funds would own 38.5%. Democratic senators had earlier objected to those Gulf funds taking large stakes.

Democratic FCC Commissioner Anna Gomez dissented in spirit, saying: “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.”

A U.S. judge has temporarily blocked the takeover pending a March trial on a challenge by a dozen states. The Justice Department and FCC had already approved the merger itself.