A group of Democratic lawmakers are sounding the alarm about foreign investors backing Paramount Skydance‘s $111 billion proposed deal to acquire Warner Bros. Discovery.
The senators, in a letter to the FCC on Monday, called for a “full and independent” probe of the merger, citing concerns that financing from Middle Eastern sovereign wealth funds and Chinese gaming giant Tencent could give them influence over editorial decisions at CBS News and CNN.
“This constellation of foreign investment from China and from Gulf states, with complex and sometimes competing relationships with the United States, demands rigorous, not perfunctory, review,” the letter reads.
Saudia Arabi’s Public Investment Fund, the Qatar Investment Authority and Abud Dhabi Investment Authority are collectively providing roughly $24 billion in funds to help bankroll Paramount’s bid for Warner Bros. Discovery, according to SEC filings. For years, these funds have bankrolled global buyout firms, including Apollo Global Management, which is among the groups financing the offer. The deal was structured to provide capital through non-voting equity investments, meaning the financiers don’t have any governance rights.
In the letter, the senators said that the financing was purposely designed to avoid triggering mandatory review by the Committee on Foreign Investments (CFIUS) in the United States, which assesses investments in businesses that could pose a national security risk. The Middle Eastern funds could try to advance “conflicting interests” from those of the U.S. with influence over CNN’s editorial decisions and business priorities, they wrote. Of particular concern is Saudi prince crown prince Mohammed bin Salman, who is widely believed to have ordered the murder of The Washington Post reporter Jamal Khashoggi in 2018, according to the letter.
“The $24 billion aggregate investment gives these governments a significant financial stake in the future content, licensing, and strategic decisions of a combined entity that includes some of the most-watched news and entertainment networks in America,” the senators, led by Cory Booker (D-N.J.), wrote.
These concerns extend to Tencent, which committed $1 billion in equity financing, reported Bloomberg in March. The lawmakers said that the Chinese government, through the company, can impact decisionmaking over major news outlets owned by the combined company through information rights, licensing deals and content output agreements, among other things that give Tencent implicit leverage. The letter points to Chinese laws requiring domestic tech companies to cooperate with state intelligence demands, saying that Tencent’s stake gives the government a “concrete avenue for potential foreign influence over the editorial independence of American broadcast journalism and content.”
Paramount Skydance has maintained that the FCC’s role in the deal is “minimal,” describing the foreign investment component as warranting only a cursory review. The senators urged the agency to reject that premise and conduct a full probe under the Communications Act, which bars foreign entities from owning more than 25 percent of the equity in a U.S. entity that has an FCC-issued license. For approval to be granted, the agency must determine that the arrangement serves the public interests. They also called for the FCC to coordinate with the Justice Department, CFIUS and intelligence agencies before concluding that the financing is risk-free.
Booker was joined by Sens. Chuck Schumer, Mazie Hirono, Dick Durbin, Richard Blumenthal, Elizabeth Warren, Sheldon Whitehouse.
