FCC clears Paramount 49.5% foreign ownership stake sale

The FCC cleared Paramount's foreign ownership threshold. No commissioner voted. That threshold had previously required FCC approval if it exceeded 25 percent, and the agency did it without a single commissioner casting a vote. The Federal Communications Commission approved Paramount Skydance's plan to sell large equity stakes to the sovereign wealth funds of Saudi Arabia, the United Arab Emirates, and Qatar, issuing a declaratory ruling through its Media Bureau rather than putting the matter before the full commission.

What the FCC Actually Approved

US law requires companies holding broadcast station licenses to obtain FCC approval when direct or indirect foreign ownership exceeds 25 percent of their stock. Paramount filed a petition asking the agency to waive that limit, saying its indirect foreign ownership would reach 49.5 percent once the sovereign wealth investments came through. The company owns CBS and holds FCC licenses for the 28 local CBS stations it owns and operates.

The ruling permits 'up to 100 percent indirect foreign equity interest of Paramount, in the aggregate,' according to the order. That is a far wider opening than the 49.5 percent figure at the center of the FCC Paramount 49.5% foreign ownership debate. Paramount itself told the agency the number could shift 'in light of routine fluctuations in publicly held equity interests and to account for potential future investments.'"

What stays in American hands, at least on paper, is voting control. The Ellison family and RedBird Capital Partners will continue to own 100 percent of Paramount's Class A voting shares. The foreign investors get Class B non-voting shares. No editorial seat at the table, no ballot in shareholder meetings that matters.

The Money Behind the Deal

The sovereign wealth money is not flowing into Paramount alone. It is financing a much bigger transaction. Paramount is buying Warner Bros. Discovery in a $111 billion deal, and the funds plan to invest $24 billion in that combination. Saudi Arabia's Public Investment Fund is set to contribute $10 billion. The Qatar Investment Authority and Abu Dhabi's L'imad Holding Co. will separately add $7 billion.

The merger would combine two of the largest movie studios, fold streaming service Paramount+ together with HBO Max, and hand Paramount ownership of CNN and other TV channels. That is the prize. The foreign equity stakes are the fuel.

One Commissioner, Zero Votes

"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 was FCC Commissioner Anna Gomez. She's the only Democrat on the commission. Gomez was reacting to the approval, and she said she called for this new and novel issue to go to a full commission vote given what's at stake, because she believes something this weighty deserves real scrutiny. But the FCC snuck this ruling out. It was a staff-level decision. There was no public vote, and there's no accountability for a call of this magnitude.

She described the recipients of the equity as "some of the most repressive governments in the world."

Senate Democrats raised their own alarm in a May letter to FCC Chairman Brendan Carr, writing that "the foreign governments behind this investment systematically suppress press freedom in their own countries and have made a series of investments and gifts to entities controlled by the president and his family, raising serious concerns about their influence over the independent American media and the potential for corruption."

The approval was never really in doubt. Carr said back in March, "I think this is a good deal, and I think it should get through pretty quickly."

Why the FCC Says It Is Fine

The Media Bureau order pushed back hard on the idea that non-voting stock still buys practical influence. "We find this argument unconvincing. The Proposed Investment is not a loan, which must be repaid, but a purchase of stock that has no voting rights," the order said. It added that the agency was 'persuaded by Paramount's argument that the Foreign Investors therefore will not be able to wield any influence, let alone control, over decisions involving the Licensees.'"

The agency also nodded to a broader principle, stating that it "has long recognized that foreign investment in US companies and networks, including broadcast, fosters technical innovation, supports job creation, and strengthens the US economy."

The Conditions Attached

Paramount did not walk away empty-handed from the negotiating table, and it did not walk away unshackled either. The company agreed to a set of compliance terms:

• It must monitor foreign ownership to ensure continued compliance with FCC rules.
• Foreign investors cannot have 'any influence, direction, or control over or provide any commentary or guidance on Paramount's content decisions, company management,' nor access to 'Paramount's non-public US Person Data.'"
• Paramount must seek additional FCC approval before changing any voting, governance, or information rights of the foreign investors, or before any change that pushes foreign ownership beyond the terms of the ruling.

The order also cited Paramount's commitment to '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 Merger Is Still Stuck

Here is the part that makes the whole approval feel provisional. The Warner Bros. Discovery acquisition has not closed. A group of 12 states led by California filed a lawsuit seeking to block it, and a federal judge ruled the merger is likely to reduce competition substantially and violate antitrust laws. The judge halted the deal while litigation continues, a case that could ultimately be decided by a federal appeals court.

The Justice Department approved the merger, but that has not moved the judge. Paramount has been threatening to leave California if the state does not back down. California Attorney General Rob Bonta accused the company of trying to "blackmail the state into letting an illegal deal through."

Media advocacy group Free Press warned in an FCC filing that "Media advocacy group Free Press warned in an FCC filing that 'Paramount will begin its ownership of WBD with nearly $80 billion in debt, which will require deep cuts to Paramount's pre-merger holdings and existing operations. These cuts will negatively impact the public interest, particularly at Paramount's broadcast units."

The FCC Paramount 49.5% foreign ownership approval settles the ownership question. It does not settle whether the deal the money is paying for can legally happen at all.

A Pattern of Approvals

This is not the first time the agency has cleared a Paramount transaction. Last year, the FCC allowed Paramount to buy Skydance for $8 billion after the company agreed to install an ombudsman at CBS. Carr, who has repeatedly threatened to revoke broadcast licenses from news companies that Trump does not like, described that ombudsman as a "bias monitor."

They got that approval fast. It came right after they reached a $16 million settlement with Trump, in a lawsuit accusing CBS of deceptively editing a pre-election interview with Kamala Harris, a settlement they agreed to even though CBS had already rebutted Trump's claims by releasing an unedited transcript and camera feeds of the interview. But they settled anyway. And it's not like CBS was silent, since they're the ones who put out the full transcript and the camera feeds, so we've got to wonder why a company can't just stand on the record it already made public.

Now the same company holds a green light to sell nearly half its indirect equity to three foreign governments, with a merger worth $111 billion hanging in the balance and a federal judge standing in the way. The FCC Paramount 49.5% foreign ownership decision is done. Everything it is meant to finance is not.