Paramount has asked the FCC to sign off on its equity investment from three prominent Middle Eastern sovereign wealth funds backing the company’s acquisition of Warner Bros. Discovery is valued at $111 billion.
In a petition for declaratory judgment to the FCC signed by Paramount Chief Legal Officer Makan Delrahim, Paramount asked the Brendan Carr-led panel to sign off on the deal involving the Saudi Public Investment Fund, the Limad Fund, Abu Dhabi’s sovereign wealth fund, and the Qatar Investment Authority fund.
Paramount notes that David Ellison and his father, Larry Ellison, as well as Red Bird Capital, will control all voting shares in the company, and that SWFs will only hold shares of non-voting stock.
“Upon completion of the proposed investment, petitioner expects total indirect foreign ownership of equity interests in Paramount to be approximately 49.5 percent,” Paramount wrote, underscoring the extent of the company’s dependence on foreign investment.
Paramount is asking for a ruling allowing up to 100% of shares or voting shares to be owned by foreign owners, although this is a procedural maneuver and not a sign of any future plans. The FCC approval applies only to the foreign financing, not to the deal itself, which received approval from WBD shareholders last week.
“Paramount has filed a customary petition for declaratory judgment with the FCC regarding indirect foreign investment in Paramount’s broadcast television stations as a result of a recent stock distribution,” a Paramount spokesperson said. Hollywood Reporter. “Filing with the FCC is absolutely standard for such investments and is not a condition of closing Paramount’s acquisition of WBD.
“Upon the closing of the transaction and the IPO, the Ellison family and RedBird will collectively own the largest equity interest in the combined company and will remain the sole holders of Class A common stock, representing 100% of the voting stock, with no other party to the common stock having any governance rights, voting stock or representation on the board of directors.” “Combining the complementary assets of Paramount and WBD will strengthen competition while creating a strong champion for creative talent and consumer choice.”
The three Middle East funds will reportedly provide $24 billion of capital to support the Warner deal. The FCC filing confirms that the Public Investment Fund will be the largest shareholder, as it will own 15.1% of Paramount shares after the deal closes, while Limad owns 12.8%, and the Qatar Fund owns 10.6%. Together, these three funds will control 38.5% of Paramount shares (again, non-voting shares). The remaining foreign stockholders include passive investors in the Red Bird Funds, entities that acquired Paramount stock and filed a Form 13F with the SEC.
Paramount also provides answers to the Committee for Evaluating Foreign Participation in the U.S. Telecommunications Services Industry (sometimes called the “Telecommunications Panel”), which advises the FCC on national security and law enforcement concerns.
In the filing, Delrahim argued that foreign investment would ultimately bolster the company’s local news programming, improve its technology stack, and increase programming diversity, citing the UFC fights deal as an example.
“Reducing barriers to further investment in Paramount, including by allowing the company to obtain additional capital from non-U.S. investors, will enable it to devote additional resources to maintaining and enhancing the legacy and broad reach of its licensees’ broadcast television operations,” Delrahim wrote. “In turn, Paramount’s ability to compete in the broadcast television and broader video markets will improve, thereby strengthening the overall industry strength. The new equity investment, leveraging the efficiency gains resulting from the Paramount-Skydance deal, will better position the company to meet the ongoing challenges facing broadcasters and operators of pay-TV linear networks.”
