PARIS: Paramount Skydance is seeking approval from the Federal Communications Commission for Persian Gulf sovereign-wealth funds to take a substantial equity stake in the company as part of its $81 billion acquisition of Warner Bros. Discovery WBD 0.48 per centincrease; green up pointing triangle.
On Monday, the David Ellison-run company filed a petition to the FCC asking the agency to permit the significant ownership by Middle East funds, saying that the proposed deal would result in foreign investors indirectly owning nearly 50 per cent of Paramount equity interests. Paramount is the parent of CBS, which owns 28 local television stations.
Current FCC rules prohibit foreign investors from owning more than 25 per cent of a company that holds broadcast licenses, unless the commission determines it serves the public interest.
The request represents one more potential hurdle for Paramount as it seeks to close its deal to buy Warner. If the FCC declines to approve, it would likely mean that Paramount can’t receive funding from the sovereign-wealth funds, and the Ellisons and RedBird Capital Partners might have to pay the entire $47 billion in equity financing they agreed to backstop under the terms of the acquisition.
Paramount earlier this month signed a deal to receive about $24 billion in combined investment from three Middle East sovereign-wealth funds: Saudi Arabia’s Public Investment Fund, Qatar Investment Authority and Abu Dhabi’s L’imad Holding Co.
“An FCC filing is completely standard for investments such as this and is not a condition to closing Paramount’s acquisition of WBD,” a Paramount spokesman said.After the deal closes, the Ellison family and RedBird will remain the biggest owners of equity in the company and have full voting control, Paramount said. Voting rights and decision-making functions will be controlled by the Ellison family, the company said. Paramount Chief Executive David Ellison is the son of billionaire Oracle co-founder Larry Ellison.
Paramount in the filing said that reducing barriers to foreign investment would allow the company to better compete in the broadcast marketplace and thereby promote “the strength of the industry overall.”
Paramount also requested FCC approval of up to 100 per cent of “indirect aggregate foreign equity…to accommodate routine fluctuations in publicly held equity interests and to account for potential future investments.”
