Senators Urge FCC to Halt Paramount-Warner Bros. Merger
Three Democratic senators have formally requested that the Federal Communications Commission (FCC) pause the merger between Paramount and Warner Bros. Discovery. Their main concern revolves around the influence of foreign investors in what could become one of the largest media companies in the U.S.
In a joint letter addressed to FCC Chairman Brendan Carr, Senator Cory Booker from New Jersey, Adam Schiff from California, and Elizabeth Warren from Massachusetts insisted that any attempts by Paramount to finalize this deal should be stopped until a thorough investigation into the foreign investors is completed.
The senators emphasized that the FCC must conduct this review to understand any potential “national security threats” stemming from foreign investments in the $110 billion company. If the merger were to go through, CNN and CBS News would end up under a single corporate entity, which would further intensify the consolidation of the news media landscape.
According to a financial disclosure made by Paramount in April, which was referenced by the senators, the stake of foreign ownership in the newly formed company could reach approximately 49.5%. Paramount also noted that a U.S. corporation would maintain control over all voting rights through the Ellison family.
The disclosed information pointed to shareholders from Saudi Arabia’s Public Investment Fund, along with various entities from the United Arab Emirates and Qatar.
In its filing to the FCC, Paramount asserted that the merger does not create “any national security, law enforcement, foreign, or trade policy concerns.”
However, the senators are advocating for a more careful evaluation on the implications of such foreign ownership, cautioning that the statements made by the Ellisons shouldn’t be accepted without scrutiny.
They argued that the FCC should reject Paramount’s request for preliminary approval, noting that under Section 310 of the Communications Act of 1934, entities or individuals from outside the U.S. cannot own over 25% of the stock in a U.S.-based company with an FCC-issued broadcasting license.
Booker, Schiff, and Warren set a July 1 deadline for Carr to inform Paramount that the merger couldn’t proceed until the foreign investment review was thoroughly completed.
Presently, the main regulatory challenge to this merger is the pending FCC approval. Interestingly, the Justice Department indicated last week that it wouldn’t oppose Paramount’s acquisition of Warner Bros.
After an extensive eight-month investigation, the Justice Department’s antitrust division concluded that “the transaction is not likely to harm competitors or U.S. consumers” in areas like on-demand streaming, linear television, and film production.
Warren expressed her discontent with the Justice Department’s ruling and urged state attorneys general to keep pushing against the deal. California Attorney General Rob Bonta is already spearheading a coalition of states preparing to file a lawsuit to prevent Paramount from integrating Warner Bros. into its expanding operations.
More than 5,000 filmmakers and actors from Hollywood voiced their frustration in an open letter last April, calling for an end to the merger. They claimed it would limit competition and reduce job opportunities in the industry.
“Our industry is already under significant pressure due to past consolidations, leading to fewer films being produced and released,” the letter stated. “We are genuinely worried about the backing for this merger, which seems to favor a small number of powerful stakeholders over the public’s interests.”
