A significant political controversy has arisen surrounding a proposed $111 billion media merger that may grant Gulf investors remarkable control over major Western media companies.
This debate centers on Paramount’s intended buyout of Warner Bros., significantly supported by investments from Saudi Arabia, the United Arab Emirates, and Qatar.
These countries collectively contributed $24 billion, primarily fueling the equity financing, alongside an additional $54 billion in newly incurred debt.
Paramount, under the leadership of David Ellison, who is 43, has quietly approached the Federal Communications Commission (FCC) for an exemption that could permit up to 100% foreign ownership, while capping voting rights at 20%.
According to existing U.S. regulations, foreign investors are restricted to 25% ownership in companies with broadcast licenses unless regulators decide otherwise based on what is deemed “public interest.”
This filing has ignited a strong backlash from critics, notably California Democrat Sam Licciardo, who has publicly condemned the proposal and the regulatory bodies involved.
He stated, “Congress did not intend for this agency to transfer control of our airwaves to Riyadh, Abu Dhabi, and Doha. This must not happen.” Licciardo went on to emphasize that “the committee must prevent legal loopholes from allowing what effectively turns American media and infrastructure into the hands of a foreign regime.”
Despite the outcry, Paramount argues that the concerns are exaggerated.
The company maintains that the application is standard and that Gulf investors will play a passive role with no voting stakes, governance rights, or board representation.
Paramount also reassured that control of voting stock will stay solely with the Ellison family and Redbird Capital.
However, skepticism persists, especially considering that the new entity will incorporate Warner, the parent company of CNN, potentially amplifying foreign investors’ sway over significant U.S. news media.
The implications of this merger stretch beyond U.S. borders.
In the UK, where Paramount owns Channel 5, strict regulations forbid foreign state-owned entities from controlling broadcast licenses.
The UK’s Ofcom is expected to closely examine the merger, assessing whether the new owners satisfy “fit and proper” criteria and the potential impact on media diversity.
Additionally, the UK Competition and Markets Authority has initiated an early-stage review that will be forwarded to the European Commission soon.
Further complicating matters, the deal includes investments tied to Chinese tech giant Tencent, which has been flagged by the U.S. as connected to the military and the Communist Party.
Hollywood voices are also raising alarms.
Labor unions and prominent actors like Robert De Niro and Glenn Close have joined the resistance, citing worries over foreign influence and potential job losses.
Paramount has already introduced a $6 billion cost-reduction strategy at Warner, contributing to fears of layoffs in a sector already facing immense pressure.
Meanwhile, the Ellisons have promised to secure the entire $47 billion equity component of the merger if foreign financing falters.
David Ellison’s father, Larry Ellison, the Oracle founder worth about $213 billion, has also attracted attention due to his close relationship with Donald Trump, which Paramount sees as a possible regulatory advantage.
Paramount asserts that the merger will enhance competition and create more opportunities for both content creators and consumers.
