Democratic Senators Urge FCC to Block Paramount-Warner Bros. Merger From Closing Until Review of Deal’s Foreign Investment Concludes

Three Democratic U.S. senators are urging the FCC to prevent Paramount Skydance from closing its $111 billion merger with Warner Bros. Discovery until the government’s national security review of the foreign investors in the deal has run its course.

In a letter dated June 18 sent to FCC Chairman Brendan Carr, the lawmakers — Sens. Cory Booker (D-N.J.), Elizabeth Warren (D-Mass.) and Adam Schiff (D-Calif.) — cited Paramount’s April 24 petition seeking a declaratory ruling from the FCC for approval of “significant foreign investment.”

Booker, Warren and Schiff requested that the FCC, by July 1, issue “formal notice to Paramount that the transaction may not close” while the review of the foreign investments is proceeding.

Paramount in that filing disclosed that the merged Paramount-WBD would be 49.5% owned by foreign investors, with about 38.5% of the equity in the new company owned by the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi. In addition, Paramount’s filing asked the FCC to authorize up to 100% foreign equity ownership in its broadcast licensees.

Congress set a 25% limit on direct foreign ownership of American TV and radio stations without prior FCC approval. The senators, in their June 18 letter to Carr, noted, “Under FCC rulemaking and procedures, the Commission must now coordinate, through the Committee for the Assessment of Foreign Participation in the U.S. Telecommunications Services Sector, with other executive branch agencies to assess the potential national security and foreign policy risks posed by that foreign ownership.”

The senators wrote in the letter: “The Commission has an obligation to honestly answer a fundamental question: whether placing 49.5 percent of the equity in the parent company of CBS, CNN, and 28 broadcast television stations into the hands of three foreign governments serves the American public. We are prepared to pursue every available avenue — legislative, oversight, and legal — to ensure that it does.”

Variety has reached out to the FCC for comment.

Separately, on June 12, the Justice Department’s Antitrust Division announced that it was closing its investigation into Paramount-WBD, without imposing any requirements for divestitures or other concessions on the part of Paramount Skydance. Senior DOJ officials moved to clear the Paramount-Warner Bros. Discovery deal before the team of lawyers investigating the matter could issue a recommendation — and those lawyers had been “leaning” toward advising that the DOJ should file a lawsuit seeking to block the merger, the Wall Street Journal reported. Asked for comment on the Journal report, a DOJ spokesperson said: “The Antitrust Division conducted a thorough investigation to assess whether the proposed transaction would harm competition. The investigatory record indicated that the transaction will increase competition across the media and entertainment ecosystem, benefiting American consumers and workers.” In response to the WSJ report, Warren said in a statement, “The American people need to know if this merger was approved as a political favor. This reeks of corruption.”

In March, Booker and six other Democratic senators wrote to Carr demanding the FCC conduct a “through review” of the Paramount-WBD deal’s foreign investment and raised concerns about Carr’s public comments that the foreign investment warranted only a “very quick, almost pro-forma review.”

In the June 18 letter, the three senators noted, “Paramount’s petition seeks far more than approval for the 49.5 percent aggregate foreign investment. The media conglomerate is requesting advance approval for each foreign investor to increase its individual stake up to 20 percent in the future, which, should each of the Sovereign Wealth Funds exercise that option, could result in up to 100 percent aggregate foreign ownership of one of the nation’s largest broadcast media companies.”

While such advance approval is standard as a procedural matter, “the nature of the request is unprecedented,” Booker, Warren and Schiff wrote. “It seeks open-ended authorization for foreign government expansion into the parent company of CBS, CNN, and 28 broadcast television stations. Advance approval was never designed to authorize the wholesale transfer of control over one of America’s most consequential news organizations to foreign government-linked investors absent a finding that such a transfer serves the public interest and does not threaten national security.”

Paramount Skydance has said in SEC filings that the three Middle Eastern sovereign wealth funds “have agreed to forgo any governance rights — including board representation — associated with their non-voting equity investments.” The company maintains that the Ellison family and RedBird Capital Partners will have 100% control over a merger Paramount-Warner Bros. Discovery.

The senators said the FCC should reject Paramount’s request to allow up to 100% foreign ownership of Paramount-Warner Bros. “out of hand.” They wrote: “Paramount’s assertion that this transaction ‘will not present any national security, law enforcement, foreign policy, or trade policy concerns’ is not a legal determination the Commission may accept without scrutiny.”

The three senators noted in their letter that Saudi Arabia’s Public Investment Fund is controlled by Crown Prince Mohammed bin Salman, “whom the U.S. intelligence community concluded ordered the killing of Washington Post journalist Jamal Khashoggi.”

On April 29, the Justice Department’s National Security Division notified the FCC that the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector had begun its review of the Paramount petition seeking a waiver of foreign-ownership rules. According to the three Democratic senators, under the timeline, the committee’s review could take until late September to conclude — and if it identifies potential national security risks, a second 90-day assessment period would follow.

“Paramount’s stated intention to close the deal by July is flatly incompatible with a statutorily required national security review that may not yet have begun,” the senators wrote in the letter to Carr. “Additionally, Paramount has publicly characterized its FCC filing as not a condition of closing, signaling its intent to complete the acquisition before the Commission has made a public interest determination.”

In their letter to Carr, Booker, Warren and Schiff also asked the FCC to confirm that the review by the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector is underway and to “provide a projected timeline for its completion.” The senators also requested that the FCC “confirm whether Attorney General [Todd] Blanche is serving as Chair of the Committee for purposes of this review, and if he has not recused himself, identify the basis on which he is participating in a national security review with direct financial implications for sovereign wealth funds with documented ties to the Trump administration.”

The full text of the senators’ letter is at this link.