Paramount Skydance said the merged Paramount-Warner Bros. Discovery will be 49.5% owned by foreign investors, with about 38.5% of the equity in the new company held by a trio of Middle Eastern funds.
In a filing Monday with the FCC, Paramount said Saudi Arabia’s Public Investment Fund will have a 15.1% equity stake; the United Arab Emirates’ sovereign wealth fund will own 12.8% equity; and the Qatar Investment Authority will own 10.6% equity. Paramount has previously said foreign investors backing its WBD takeover will not have board seats or voting shares.
According to Paramount’s filing, the Ellison family — David Ellison and his father, Larry Ellison — along with RedBird Capital Partners will continue to hold the largest equity stake in Paramount Skydance-Warner Bros. Discovery and will continue to have control over shares with 100% voting power.
In all, the Middle Eastern funds will own 38.5% of the equity in Paramount-WBD, with the remainder of the foreign ownership total representing existing investors in Paramount Skydance and/or RedBird. In its filing with the FCC, Paramount is requesting “advance approval… for each of the entities seeking specific approval to increase their equity and/or voting interests in Paramount up to 20% at some future time.”
Paramount Skydance enlisted the three Middle Eastern sovereign wealth funds to invest close to $24 billion in the WBD deal; Saudi Arabia’s PIF is taking a roughly $10 billion stake.
Last week, Warner Bros. Discovery shareholders overwhelmingly voted in favor of the $111 billion sale to Paramount. The pact still requires approval by European regulators, while state attorneys general could move to launch a legal challenge to the Paramount-WBD deal. Paramount, even before it won the WBD deal, said it proposed WBD takeover had cleared a milestone at the Justice Department, after the expiration of the statutory waiting period following Paramount’s “certification of compliance” with the DOJ’s second request for information under the Hart-Scott-Rodino antitrust act. However, the DOJ has the latitude to challenge a merger even after the HSR waiting period expiration.
Paramount’s FCC filing Monday is seeking a “declaratory ruling” to permit the foreign ownership in the Paramount-WBD entity (available at this link). However, the FCC’s approval of the foreign ownership of Paramount-Warner Bros. is not a condition for the closing of the deal, according to a Paramount spokesman.
Specifically, Paramount seeks a declaratory ruling from the FCC to: “(1) permit existing and prospective foreign investors to indirectly hold equity and voting interests in Paramount, in the aggregate, in excess of the 25% statutory benchmarks; (2) specifically approve certain foreign investors to indirectly hold equity and/or deemed voting interests of greater than 5% in Paramount; and (3) grant advance approval for the non-controlling prospective foreign investors to increase their indirect equity and/or voting interests up to 20% in Paramount.”
In a statement to Variety, a rep for Paramount Skydance said, “Paramount has filed a customary petition for a declaratory ruling with the FCC relating to the indirect foreign investment in Paramount’s broadcast television stations as a result of the recent equity syndication. An FCC filing is completely standard for investments such as this and is not a condition to closing Paramount’s acquisition of WBD. When the transaction and equity syndication close, the Ellison family and RedBird will collectively hold the largest equity stake in the combined company and continue to be the sole owners of Class A Common Stock, representing 100% of the voting shares, with no other equity syndication party having any governance rights, voting shares or board representation.”
The Paramount rep added, “The combination of Paramount and WBD’s complementary assets will enhance competition while creating a strong champion for creative talent and consumer choice.”
