FCC lets Saudi, Qatari and Emirati funds take 49.5% of Paramount-Warner equity

The Federal Communications Commission on 17 September approved Paramount Skydance's request to let foreign investors hold 49.5 percent of the equity in the company that would own Warner Bros. Discovery. Three Gulf sovereign funds account for 38.5 percentage points of that stack: Saudi Arabia's Public Investment Fund at 15.1 percent, Abu Dhabi's L'imad Holding at 12.8 percent and the Qatar Investment Authority at 10.6 percent. Together they have pledged about $24 billion, split as $10 billion, $7 billion and $7 billion.

US law caps foreign ownership of a firm that holds broadcast licences at 25 percent unless the FCC says otherwise. Paramount owns 28 CBS stations, so the cap applies. The funds will hold non-voting Class B stock. The Ellison family and RedBird Capital Partners keep 100 percent of the voting shares. The commission, chaired by Brendan Carr, wrote that the funds "will not be able to wield any influence, let alone control, over decisions involving the Licensees." It also pre-cleared individual foreign holders up to 20 percent and, in the aggregate, up to 100 percent indirect foreign equity if more money is needed later.

A merger that is not closed

Paramount's takeover of Warner Bros. Discovery is still hanging on a separate antitrust case brought by a dozen states and opposed by writers' groups. Published deal values have ranged from about $81 billion to $111 billion depending on how debt and cash are counted. The FCC order does not approve the merger. It only says the foreign money can sit in the cap table if the merger happens.

Conditions attached to the waiver bar the funds from governance seats and from non-public US data. Paramount called the review fair and repeated that votes stay with Ellison and RedBird. Anna Gomez, the commission's only Democratic member, dissented in substance if not always in form, warning that a cheque of this size in a company that owns CBS, CNN's future corporate cousin, HBO and a studio lot is not a silent partnership.

Why the Gulf funds want a studio

PIF, QIA and the Abu Dhabi vehicle have spent the past decade buying into sport, games and streaming because those assets travel and because they want a hedge against oil. A near-half equity slice in a combined Paramount-Warner would be their largest cultural holding in the United States. The no-vote structure is how lawyers made it palatable in Washington. Critics, including some Republicans who usually like foreign capital, say influence does not need a board seat when the company may need another cheque.

Carr's majority treated the file as a capital-markets case. Gomez treated it as a speech case. Both readings can be true at once. If the states' lawsuit kills the merger, the waiver becomes a document about a deal that never closed. If the merger closes, CBS local news, a film studio and a large streaming library will have Gulf funds as their largest non-voting owners, with permission already written to go higher.