Paramount Skydance is asking the Federal Communications Commission to approve the Middle East’s equity investment in its $110 billion merger with Warner Bros. Discovery.
According to a public notice by the FCC on Monday, the David Ellison-led media giant is asking the agency to “permit existing and prospective foreign investors to indirectly hold equity and voting interests in Paramount, in the aggregate, in excess of the 25% statutory benchmarks.”
It also asked the regulator to “specifically approve certain foreign investors to indirectly hold equity and/or deem voting interests of greater than 5% in Paramount” and “grant advance approval for the non-controlling prospective foreign investors to increase their indirect equity and/or voting interests up to 20% in Paramount.”
The media giant’s petition specifically asks for approval for foreign investors “in the aggregate to indirectly hold up to 100 percent of its equity and/or voting interests in light of routine fluctuations in publicly held equity interests and to account for potential future investments.” However, it notes that the “indirect foreign ownership of equity interests in Paramount will be approximately 49.5 percent” and that it will “not result in a transfer of control of Paramount.”
A Paramount spokesperson told TheWrap that its filing is “completely standard for investments such as this and is not a condition to closing Paramount’s acquisition of WBD.”
“When the transaction and equity syndication close, the Ellison family and RedBird will collectively hold the largest equity stake in the combined company and continue to be the sole owners of Class A Common Stock, representing 100% of the voting shares, with no other equity syndication party having any governance rights, voting shares, or Board representation,” the spokesperson added. “The combination of Paramount and WBD’s complementary assets will enhance competition while creating a strong champion for creative talent and consumer choice.”
According to the petition, the three Middle Eastern sovereign wealth funds will own a total of 38.5% of the non-voting equity in Paramount. Saudi Arabia’s Public Investment Fund will own 15.1% after the deal closes, while L’Imad Holding Company will own 12.8% and the Qatar Investment Authority will own 10.6%.
Other foreign equity owners include “passive limited partner investors” in funds managed by RedBird Capital Partners, who will own approximately 5.2%. The funds managed by RedBird will hold approximately 9% of the equity of Paramount Skydance in total.
In addition, foreign investors will include entities that have acquired Paramount shares and have filed a Form 13F with the Securities and Exchange Commission.
Paramount is also submitting responses to standard questions directly to the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector, also known as “Team Telecom.”
“Reducing barriers to further investment in Paramount, including by allowing the company to pursue additional capital from non-U.S. investors, will enable it to allocate additional resources to preserve and enhance the legacy and broad reach of the Licensees’ television broadcast operations,” Paramount chief legal officer Makan Delrahim wrote in the filing. “In turn, Paramount’s ability to compete in the television broadcast and broader video marketplaces will improve, thereby promoting the strength of the industry overall. The new equity investment, leveraged on the efficiency gains resulting from the Paramount-Skydance transaction, will better position the company to weather continuing challenges facing broadcasters and operators of linear pay-television networks.”
The FCC’s notice states that the petition has been accepted for filing upon initial review and that Paramount may be required to submit additional documents or statements. It will also be “referred to relevant Executive Branch agencies for their views on any national security, law enforcement, foreign policy, or trade policy.”
The public can file comments until May 27, with replies due by June 11.
