WASHINGTON—The Federal Communications Commission’s Media Bureau has approved a Paramount petition that would allow 49.5% foreign ownership of the company after its merger with Warner Bros. Discovery is completed.
The approval marks an important regulatory approval but the deal still faces anti-trust lawsuits that have delayed its completion.
Paramount had filed a Petition for Declaratory Ruling with the FCC asking for a waiver of foreign ownership rules that do not allow foreign investors to own more than 25% of a company that owns broadcast stations.
In approving the petition, FCC staff dismissed worries that allowing such a large foreign ownership stake posed national security issues, noting that the Ellison family will retain 100% voting control and that the foreign investors do not have voting shares.
The Media Bureau also stressed that the FCC has the “discretion to allow foreign investment in a licensee’s controlling U.S. parent above 25% unless the Commission finds that the public interest would be served by refusing to permit such foreign investment.”
“We are persuaded by Paramount’s argument Reply Comments that the Foreign Investors therefore will not be able to wield any influence, let alone control, over decisions involving the Licensees,” the Media Bureau ruled. “Paramount has further demonstrated that David Ellison will retain control over Paramount and that the Ellison family will continue to own a majority of the voting stock, and we credit Paramount’s statement that `Paramount will ensure that there will be no interference with the editorial or decision-making policies of its broadcast stations (or CBS News or any other facets of Paramount news and entertainment programming).’"
The agency did impose, however, a number of conditions on Paramount that will require it to report any changes in foreign ownership and control. “We condition our approval of the Petition on Paramount’s returning to the Commission for approval before giving the Foreign Investors additional rights, including but not limited to, any voting rights,” the Media Bureau said.
The waiver had been opposed by Free Press, some Congressional Democrats and others who argued that foreign investors should not be allowed such a large stake in a U.S. broadcaster like CBS.
They also noted that the approval would give Saudi Arabia’s Public Investment Fund, the Qatar Investment Authority and Abu Dhabi Investment Authority a 38.5% stake in the company and that those countries had poor human rights records in terms of censorship, torture and crackdowns on dissent.
Democratic Commissioner Anna Gomez FCC Commissioner reacted to the unilateral approval of a waiver of the foreign investment in the pending Paramount-Warner Bros. Discovery merger by arguing in a statement that “The FCC just let some of the most repressive governments in the world indirectly control nearly all of a combined Paramount-Warner Bros. An investment this large in one of America's biggest media companies doesn't just buy equity, it secures influence over what gets said and what gets made.”
“That's why I called for this new and novel issue to go to a full Commission vote given what's at stake,” she added. “Instead, the FCC snuck this ruling out as a staff-level decision, with no public vote and no accountability for a call of this magnitude.”
The full ruling is available here.
