US regulator clears Paramount merger's foreign investor structure, with three Gulf funds taking 38.5%

The Federal Communications Commission has approved a foreign investment structure for Paramount’s planned merger with Warner Bros. Discovery, allowing a group of overseas investors, including three Middle Eastern sovereign wealth funds, to hold 49.5% of the company’s non-voting equity.

The decision grants Paramount’s request to exceed the 25% aggregate threshold for foreign ownership through non-voting Class B shares. It removes a regulatory hurdle for the planned transaction, while retaining limits on foreign voting interests.

Three Middle Eastern funds account for 38.5% of the approved non-voting equity. Saudi Arabia’s Public Investment Fund will hold a 15.1% stake. The United Arab Emirates’ L’imad Holding Company will hold 12.8%, and the Qatar Investment Authority will hold 10.6%.

Passive limited partners in funds managed by RedBird Capital Partners account for 5.8% of foreign equity ownership. Foreign-based entities that have bought Paramount’s Class B stock account for a further 5.2%.

The FCC also gave advance approval for foreign investors to hold up to 20% each of Paramount’s indirect equity in future. The agency said it is ‘in the public interest to permit up to 100% indirect foreign equity interest of Paramount, in the aggregate.’

The approval is centred on non-voting equity, which allows Paramount to draw on foreign capital without changing the stated limits on voting control. Paramount will need fresh FCC approval if foreign voting interests rise above 25% in aggregate. It must also return to the agency if it proposes changes to the voting interests of any foreign investor already approved.

The FCC’s action addresses one element of Paramount’s proposed acquisition of Warner Bros. Discovery. The timing of any closing has not been stated in the approval details, and it is unclear whether further regulatory decisions are required before the merger can proceed.

The available details do not set out the specific FCC conditions beyond the voting-interest limits described in the decision.

The agency did not specify how the ownership structure would affect Paramount’s operations or editorial decisions. Its ruling nonetheless permits the company to use substantial foreign funding for the planned deal through shares that do not carry voting rights.