FCC grants Paramount foreign ownership approval for broadcast licenses
The FCC cleared Paramount to exceed the foreign-ownership benchmark, while the Ellison family and RedBird retain voting control.
By James Whitfield · Staff Writer
3 min read
The FCC Paramount foreign ownership approval allows Paramount Skydance to exceed the usual foreign-ownership benchmark for a company with U.S. broadcast licenses. The Media Bureau’s declaratory ruling matters because Paramount owns CBS stations and is pursuing its proposed acquisition of Warner Bros. Discovery, though that transaction remains tied up in litigation.
The ruling does not authorize a sale of exactly 49.5% of Paramount to the Saudi, UAE and Qatari funds. Paramount told the FCC that foreign investors overall were expected to hold 49.5% indirectly under its current arrangements, while an earlier company filing put the three named Middle Eastern funds’ combined stake at about 38.5%, according to Variety.
Why did Paramount need FCC approval for foreign ownership?
Federal law generally requires FCC approval when direct or indirect foreign ownership of a company holding U.S. broadcast licenses exceeds 25%. The FCC said granting Paramount’s petition served the public interest, according to Ars Technica and the Los Angeles Times.
Paramount owns and operates 28 local CBS stations with FCC licenses, Ars Technica reported. The agency’s ruling permits as much as 100% aggregate indirect foreign equity in Paramount, subject to conditions, rather than setting a permanent 49.5% ceiling.
Who keeps control of Paramount?
The foreign investors will own Class B shares without voting rights, while the Ellison family and RedBird Capital Partners will retain all Class A voting shares, according to Ars Technica. The FCC accepted Paramount’s representation that the ownership changes would not transfer control of the company.
In its April filing, Paramount listed projected stakes of 15.1% for Saudi Arabia’s Public Investment Fund, 12.8% for a United Arab Emirates sovereign wealth fund and 10.6% for the Qatar Investment Authority, Variety reported. Those figures total 38.5%; other foreign investors account for the difference between that total and Paramount’s expected 49.5% foreign ownership.
What restrictions apply to the investors?
The FCC requires Paramount to track foreign ownership and keep the investors from influencing, directing or offering guidance on content choices or company management, according to Ars Technica’s account of the order. The investors also may not obtain access to non-public data about U.S. persons.
Paramount must return to the FCC before changing the investors’ voting, governance or information rights, or before an ownership change that exceeds the terms of the ruling. Paramount had also said the investors would receive neither board seats nor voting shares, Variety reported.
FCC Commissioner Anna Gomez objected to the ruling being issued at the staff level instead of through a full commission vote, saying the size of the investment raised questions about influence. Senate Democrats and media advocacy group Free Press separately raised concerns about the investment, according to Ars Technica.
The decision is separate from completion of Paramount’s proposed Warner Bros. Discovery purchase. Ars Technica reported that a federal judge halted that deal while litigation continues after finding it likely to substantially reduce competition and violate antitrust law.
This story draws on original reporting from Ars Technica.