A group of Democratic Senators are urging the Federal Communications Commission to conduct a foreign investment review of the $110 billion Paramount-Warner Bros. Discovery merger.
Paramount will pay $31 per share in cash to acquire 100% of WBD’s total outstanding shares. The transaction is funded by $47 billion in equity, fully backed by the Ellison family and RedBird Capital Partners, though it may include other strategic and financial partners at closing.
The company has not disclosed who those partners would be, though Saudi Arabia’s Public Investment Fund, the Qatar Investment Authority and Abu Dhabi’s L’imad Holding Company previously committed $24 billion in financing. Tencent Holdings, which also previously committed $1 billion in financing before backing out, is also reportedly considering investing several hundred million dollars in the combined company.
“This constellation of foreign investment from China and from Gulf states, with complex and sometimes competing relationships with the United States, demands rigorous, not perfunctory, review,” the lawmakers wrote in a letter to FCC chairman Brendan Carr on Monday.
The group, which is led by Sen. Cory Booker, includes Sens. Chuck Schumer, Dick Durbin, Sheldon Whitehouse, Richard Blumenthal, Elizabeth Warren and Mazie Hirono.
Paramount previously said that the sovereign wealth funds would be passive investors that would not hold any governance rights or board seats. Tencent is also a passive investor in Skydance.
But the lawmakers argued that even passive financial investors can exercise influence through “information rights, contractual covenants, content output agreements, licensing deals, and the “implicit leverage that comes from being a major creditor or equity participant in a combined entity that controls CBS, CNN, HBO, and Warner Bros. Studios.”
The group warned that the national security concerns raised by their potential involvement are “specific and serious” and that Paramount’s representations demand “careful independent verification.”
The letter specifically targets Tencent’s “well-documented” relationship with China’s Communist Party, as well as the country’s law that “requires domestic technology companies to cooperate with state intelligence services on demand.”
“A Tencent stake in the parent company of CBS News and CNN, no matter how “passive” on paper, creates concrete avenues for potential foreign influence over the editorial independence of American broadcast journalism and content,” the lawmakers said.
They also said that the Gulf sovereign wealth funds present a “separate but equally important concern,” given that they are foreign governments with “distinct and sometimes conflicting interests from those of the United States.”
“Of particular concern, Saudi Arabia’s Public Investment Fund is controlled by Crown Prince Mohammed bin Salman, whom the U.S. intelligence community concluded ordered the murder of Washington Post journalist Jamal Khashoggi in 2018,” the letter continues. “The $24 billion aggregate investment gives these governments a significant financial stake in the future content, licensing, and strategic decisions of a combined entity that includes some of the most-watched news and entertainment networks in America.”
While the merger does not involve broadcast license transfers, the group noted that Paramount’s 28 local CBS stations remain subject to the FCC’s foreign ownership rules, which prohibit foreign entities from owning more than 25% of the equity or voting interests of a U.S.-organized entity that controls an FCC-issued license without prior approval. In January, the agency also adopted enhanced reporting requirements for entities posing heightened national security risk of foreign adversary control and another codifying foreign ownership definitions and review procedures.
A mandatory review by the Committee on Foreign Investment in the United States would be triggered if a foreign entity obtains a 25% or more voting interest in a U.S. company and a foreign government holds a 49% or greater voting interest in that foreign investor — a level Paramount has said that the Middle Eastern funds don’t reach. But that would not stop Warner Bros. Discovery from submitting a voluntary filing , as its been urged to do, or CFIUS from initiating a “non-notified” review of the deal.
“The potential for foreign government influence over American journalism at home and abroad is not hypothetical. It is structural, and it is unchecked,” the lawmakers warned. “The very fact that these investment structures were deliberately designed to avoid triggering mandatory CFIUS review by nominally forgoing formal governance rights and board seats should itself compel the Commission to conduct an independent foreign ownership analysis under Section 310(b). Structuring an investment to avoid one federal review does not immunize
it from another. The Commission has an independent obligation under Section 310(b) to determine whether the aggregate foreign ownership interest in the licensee entities is consistent with the public interest, regardless of how the transaction is characterized by the parties.”
In addition to urging the FCC to launch a foreign investment review in collaboration with CFIUS, the Department of Justice’s national security division and relevant intelligence agencies, the letter asks that the agency require Paramount to publicly file all documentation related to foreign investment commitments for the transaction, including equity commitment letters, subscription agreements, side letters, and any commercial agreements between the foreign investors and the combined entity.
It also calls on the regulatory to issue a public request for information and public comment specifically focused on the foreign investment in the deal and to reject the premise that the deal would only warrant “minimal FCC involvement.”
“The FCC’s foreign ownership review process exists for exactly this moment. American broadcast infrastructure is not merely a commercial asset, it is a critical component of our national information environment,” the letter concludes. “The Communications Act charges the Commission with protecting the public interest. We urge the Commission to honor that charge.”
An FCC spokesperson did not immediately return TheWrap’s request for comment.
