Rep. Sam Liccardo has sent a letter to Federal Communications Commission Chairman Brendan Carr, urging him to reject Paramount’s petition that would allow three Middle East sovereign wealth funds to own a significant equity stake in the company once its takeover of Warner Bros. Discovery is complete.
Saudi Arabia’s PIF (public investment fund), L’Imad, an Abu Dhabi sovereign wealth fund, and a Qatar Investment Authority fund have committed some $24 billion in equity funding, and would own 38.5 percent of Paramount‘s equity, with other foreign investors bringing the total to nearly 50 percent.
“The scale, concentration, and sovereign nature of this foreign ownership present serious and unresolved questions about national security, foreign influence over American media, and public interest obligations the Commission is duty-bound to uphold,” Liccardo writes in his letter, which is dated May 1 and was obtained by The Hollywood Reporter. “This raises serious tensions with longstanding policy, embedded in Section 310 of the Communications Act for nearly a century, that American broadcast infrastructure must not be controlled by foreign interests — in particular, foreign regimes with documented records of press suppression and state-directed media influence.”
“The procedural subtlety of restricting these sovereign funds to non-voting equity shares does not resolve this conflict,” the letter continues. “The scale of their ownership alone constitutes more than mere influence; the company’s financial dependence makes it beholden to its largest shareholders. The Commission must not allow a legal technicality to launder what is, in substance, a surrender of American media and infrastructure to the hands of foreign authoritarian regimes.”
Liccardo’s district includes a large swath of the Bay Area, including Santa Clara.
As Liccardo noted, David Ellison and his father Larry Ellison would retain complete control over the combined company due to its dual-class voting structure, but he argues that the economic stake is enough to have influence over the combined company.
“The Commission’s public interest standard is not satisfied merely by confirming that domestic parties hold voting shares,” the letter states. “Broadcast licensees bear affirmative obligations to serve local communities, maintain editorial independence, and support a robust and free press. The financial architecture of this deal — in which foreign sovereign entities provide most of the equity capital — creates structural dependencies and incentive distortions incompatible with these obligations, regardless of formal voting arrangements.”
Liccardo adds that should the FCC sign off on the petition, Congress could take action in the future to set harder caps on foreign ownership, or to mandate divestitures.
“Congress did not entrust the public airwaves to this agency so that it could auction off America to Riyadh, Abu Dhabi, and Doha. This will not stand,” the letter states.
The FCC, it should be noted, is not in a position to block the deal, as no broadcast licenses are being transferred. Instead, it needs to sign off on the foreign ownership, which will be above the 25 percent legal threshold.
But Larry Ellison and RedBird have agreed to backstop Paramount’s megadeal for Warners, so even if all the foreign funding falls through, they will be required to make up for that lost financing to get the deal over the line.
