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A group of Democratic lawmakers have sounded the alarm over foreign investors’ support for Paramount Skydance’s proposed $111 billion deal to acquire Warner Bros. Television. Discovery.
The senators, in a letter to the FCC on Monday, called for a “full and independent” investigation into the merger, citing concerns that funding from Middle Eastern sovereign wealth funds and Chinese gaming giant Tencent could give them influence over editorial decisions at CBS News and CNN.
“This combination of foreign investments from China and the Gulf states, with complex and sometimes competing relationships with the United States, requires rigorous, rather than routine, review,” the letter said.
Saudi Arabia’s Public Investment Fund, Qatar Investment Authority and Abu Dhabi Investment Authority are collectively providing nearly $24 billion in funds to help finance Paramount’s bid for Warner Bros. Discovery, according to Securities and Exchange Commission filings. For years, these funds have financed global buyout firms, including Apollo Global Management, which is among the groups financing the bid. The deal is structured to provide capital through non-voting equity investments, meaning the financiers do not have any governance rights.
In the letter, the senators said the funding was deliberately designed to avoid triggering a mandatory review by the Committee on Foreign Investments in the United States (CFIUS), which evaluates investments in companies that could pose a national security risk. They wrote that Middle East funds could attempt to advance “conflicting interests” from those of the United States by influencing CNN’s editorial decisions and business priorities. Of particular concern is Saudi Crown Prince Mohammed bin Salman, who is widely believed to have ordered the killing of Washington Post reporter Jamal Khashoggi in 2018, according to the letter.
“The total investment of $24 billion gives these governments a significant financial stake in the future content, licensing, and strategic decisions of a combined entity that includes some of America’s most-watched news and entertainment networks,” the senators, led by Cory Booker, wrote.
These concerns extend to Tencent, which has pledged $1 billion in equity financing, Bloomberg reported in March. The Chinese government, through the company, can influence decision-making on major news outlets owned by the combined company through information rights, licensing deals and content production agreements, among other things that implicitly give Tencent influence, the lawmakers said. The letter points to Chinese laws requiring domestic technology companies to cooperate with state intelligence demands, saying Tencent’s stake gives the government “a tangible avenue for potential foreign influence on the editorial independence of U.S. broadcast journalism and content.”
Paramount Skydance maintained that the FCC’s role in the deal was “minimal” and described the foreign investment element as meriting only cursory review. The senators urged the agency to reject that presumption and conduct a full investigation under the Communications Act, which prohibits foreign entities from owning more than 25% of shares in a U.S. entity with an FCC license. To obtain approval, the agency must determine that the arrangement is in the public interest. They also called on the FCC to coordinate with the Department of Justice, the Committee on Foreign Investment in the United States and intelligence agencies before concluding that the financing is risk-free.
Booker was joined by Senators Chuck Schumer, Mazie Hirono, Dick Durbin, Richard Blumenthal, Elizabeth Warren and Sheldon Whitehouse.
