Democratic Senators Call for Review of Paramount's Acquisition of Warner Bros.

A coalition of Democratic senators, led by Cory Booker (D-N.J.), has formally requested that the Federal Communications Commission (FCC) conduct a comprehensive review of Paramount Skydance's proposed $111 billion acquisition of Warner Bros. Discovery. The senators expressed apprehension regarding substantial financial backing from foreign investors, specifically Middle Eastern sovereign wealth funds and the Chinese technology company Tencent. In a letter addressed to FCC Chairman Brendan Carr, they emphasized the potential for these investments to influence editorial decisions at major news outlets, including CBS News and CNN.

Hollywood Reporter

The financing structure involves approximately $24 billion from the Public Investment Fund of Saudi Arabia, the Qatar Investment Authority, and the Abu Dhabi Investment Authority. The senators argue that this foreign investment could create conflicting interests with U.S. national priorities, particularly given the controversial background of Saudi Crown Prince Mohammed bin Salman, who has been implicated in the murder of journalist Jamal Khashoggi.

Hollywood Reporter

The senators highlighted that the deal's structure, which includes non-voting equity investments, was designed to circumvent mandatory reviews by the Committee on Foreign Investment in the United States (CFIUS). They cited the Communications Act, which prohibits foreign entities from owning more than 25% of a U.S. company with an FCC-issued license without prior approval. The lawmakers urged the FCC to reject the notion that its oversight would be minimal, asserting that even passive investors like Tencent could exert influence through various means, including information rights and licensing agreements.

Hollywood Reporter

Paramount Skydance has maintained that the FCC's involvement in the merger is limited, arguing that the foreign investment component warrants only a cursory review. The company contends that the investors will not have governance rights over the merged entity. However, the senators countered this assertion, stating that the significant financial stake held by these foreign governments could impact content and strategic decisions at the combined entity.

Hollywood Reporter

In their letter, the senators called for the FCC to collaborate with the Justice Department, CFIUS, and intelligence agencies to ensure a thorough assessment of the potential risks associated with the foreign investments.

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The senators' concerns reflect a growing apprehension about foreign influence in American media and the implications for editorial independence. The involvement of Tencent, which has previously faced scrutiny for its ties to the Chinese government, raises additional questions about the potential for foreign interference in U.S. journalism.

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• “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,” — Cory Booker, U.S. Senator

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• “Even passive financial investors, as Tencent is described, can exercise influence through information rights, contractual covenants, content output agreements, licensing deals, and through 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.” — Cory Booker, U.S. Senator

Deadline Hollywood

The outcome of this inquiry could set a precedent for future foreign investments in U.S. media companies, highlighting the delicate balance between capital influx and national security interests.

Hollywood Reporter