Paramount to be 49.5% foreign-owned following WBD merger
Paramount to be 49.5% foreign-owned following WBD merger
Overseas investment will give the combined company ‘greater access to capital,’ per a new filing with the FCC.
Billionaire Larry Ellison isn’t the only one financially backing the Paramount Skydance takeover of Warner Bros. Discovery. The deal, which is being led by his son, Paramount CEO David Ellison, will also be supported by funding from three Gulf states, with billions of dollars expected to swell Paramount’s coffers. In a new filing with the Federal Communications Commission (FCC), Paramount has revealed that the soon-to-be-merged company will be nearly half-owned by foreign investors if the transaction is allowed to go forward by federal regulators.
Key Details:
- Who’s in charge?: Paramount will be 49.5% foreign-owned if its WBD deal is approved.
- Major investment: Abu Dhabi, Qatar, and Saudi Arabia have contributed $24 billion in funding to the deal.
- Won’t be popular: The reveal is likely to stir further resistance from Hollywood.
In a filing seeking approval of a foreign ownership stake, Paramount disclosed to the FCC that, if the WBD deal is consummated, the resulting company will be 49.5% foreign-owned. That includes a 38.5% stake split between Abu Dhabi, Qatar, and Saudi Arabia, which combined to contribute $24 billion to the transaction.
Paramount says that this arrangement will give it “greater access to capital,” allowing it to “compete more effectively in the provision of television broadcast services and in the broader video programming marketplace.”
To be sure, being able to count on an infusion of cash from oil-rich nations will be a boost for the combined Paramount/WBD. The combined company will have a debt load of around $80 billion and will have many other massive financial commitments to tangle with in a highly competitive entertainment marketplace.
Paramount notes that non-U.S. owners will not have voting control over the new company as it tries to quiet critics of the merger. Netflix pointed more than once to the foreign ownership aspect of Paramount’s offer to buy WBD when it was in the driver’s seat to acquire the company. This was one of the reasons that WBD opted to initially accept Netflix's acquisition offer over Paramount’s, before Ellison made Warner BRos. shareholders an offer they couldn’t refuse.
Thousands of Hollywood figures have signed an open letter opposing the merger of Paramount and WBD, arguing it will lead to fewer jobs, fewer movie releases, and less competition. Having so much overseas investment in the combined Paramount/WBD is not likely to allay any of those fears.
The deal is expected to sail past government regulators — not simply because of its merits, but because of the Ellison family’s close relationship with President Donald Trump. State attorneys general may bring a more determined challenge to the deal, however. Paramount expects the deal to close sometime before the end of the third quarter, but the company will have to pay a “ticking fee” if it doesn’t wrap up by Sept. 30.
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