The Federal Communications Commission has given the greenlight to foreign investors from three Middle Eastern sovereign wealth funds in the proposed $111 billion acquisition of Warner Bros. Discovery by Paramount. The approval allows foreign investors in the aggregate to hold more than 25 percent of Paramount’s equity, a threshold that requires FCC approval because Paramount owns broadcast licensees. Under the current financing plan, foreign investors are expected to hold 49.5 percent of Paramount’s equity after the deal closes. The funds involved include Saudi Arabia’s Public Investment Fund, the Qatar Investment Authority, and Abu Dhabi’s L’imad Holding Company. Together, they are providing approximately $24 billion in financing to support Paramount's bid for the entertainment company. The three Middle Eastern investors are expected to own a combined 38.5 percent of the merged company.
The investments will be non-voting, and FCC conditions bar the investors from influencing governance or editorial decisions. Paramount’s CEO David Ellison leads the company in this deal, and his family along with RedBird Capital will maintain the largest equity stake in the merged company. The FCC determined that allowing foreign investors to own a significant share of Paramount serves the public interest, after Paramount argued that the structure would increase access to capital and strengthen its broadcast operations. Paramount also told regulators that the additional capital would support news gathering at its broadcast stations.
This approval comes after Democratic lawmakers raised concerns about potential influence from the Middle Eastern investors on news operations like CBS News and CNN. The FCC approved the petition despite those concerns, noting that the investors will not be able to control editorial decisions or company management. Conditions were placed on the approval to ensure foreign ownership does not lead to control over broadcast operations. The FCC could take enforcement action if the approved foreign-ownership limits or conditions are violated. The FCC approval deals with Paramount’s foreign ownership structure and does not resolve the separate antitrust lawsuits challenging the merger.
The deal has already received approval from several regulatory bodies including the Department of Justice and the European Commission, according to TheWrap. The European Commission cleared the merger with conditions, including a requirement that Paramount end its United International Pictures distribution joint venture with Universal in Europe within 13 months after the merger closes.
However, the merger is still pending final resolution due to ongoing litigation involving state attorneys general and the Writers Guild of America. Paramount has agreed to delay closing the transaction until five days after a court decision on the merits, or until June 1, 2027, whichever comes first. The federal antitrust trial is scheduled to run from March 2 through March 19, 2027.
During this delay, Paramount has asked the court to require the state attorneys general and the Writers Guild of America to post a $1.88 billion bond to cover potential losses from the delayed transaction. Paramount says the delay will also trigger a fee of about $7 million per day beginning October 1 if the transaction has not closed. The additional payments would go to Warner Bros. Discovery shareholders if the deal eventually closes.
Ellison has also warned senior executives that if settlement talks do not begin by October 1, he is prepared to start moving Paramount’s operations out of California, according to Variety. A two-day settlement conference is scheduled for October 14 and 15, though it does not guarantee a resolution.
If the deal fails to close due to regulatory issues, Paramount will pay Warner Bros. Discovery a $7 billion termination fee.