The Federal Communications Commission approved a ruling letting foreign investors, including three Middle Eastern sovereign wealth funds, hold nearly half the non-voting equity in the combined Paramount-Warner Bros. Discovery media giant, a decision that clears one regulatory hurdle while a costly legal fight keeps the deal frozen.
The FCC's declaratory ruling, issued Thursday, grants Paramount's request to let foreign investors indirectly hold more than 25 percent of the company's equity in the aggregate. The commission went further, finding it "in the public interest to permit up to 100% indirect foreign equity interest of Paramount, in the aggregate." That language, buried in a regulatory filing, means the door is open for even deeper foreign ownership down the road, provided the stakes remain non-voting and Paramount comes back for fresh approval if the terms change.
The numbers tell the story. Saudi Arabia's Public Investment Fund will hold a 15.1 percent equity stake. The UAE's L'imad Holding Company takes 12.8 percent. Qatar Investment Authority picks up 10.6 percent. Together, those three entities account for 38.5 percent of the 49.5 percent total foreign non-voting equity in the David Ellison-led company, The Wrap reported.
An additional 5.8 percent of foreign equity sits with passive limited-partner investors in RedBird Capital Partners funds. Foreign-based entities holding Class B stock account for the remaining 5.2 percent.
The Ellison family indirectly holds 77.5 percent of Class A shares and roughly 40 percent of non-voting Class B shares. RedBird Capital Partners holds the other 22.5 percent of Class A shares and about 9 percent of the Class B stock. Between them, the Ellison family and RedBird hold 100 percent of the voting shares.
The FCC attached a condition: Paramount must seek new approval if its foreign voting interests ever exceed 25 percent in the aggregate, or if voting interests of any approved foreign investor change. Each named foreign investor also received advance approval to hold up to 20 percent of indirect equity in the future.
Before the FCC acted, the national security review panel known as Team Telecom, formally the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector, recommended approval. That recommendation came with strings: Paramount agreed to commitments on U.S. data protections and restrictions on foreign investor rights and access. The specific terms of those commitments were not disclosed.
A Paramount spokesperson welcomed the decision.
"We appreciate the FCC's careful review and are pleased that it has granted Paramount's petition consistent with its established process."
The spokesperson added that the combined company would have "the scale and resources necessary to compete, invest, innovate, and deliver premium content to audiences worldwide" at a time when the media industry faces "unprecedented competitive pressure from dominant big tech companies."
The FCC ruling is not the first green light. Regulators and governments representing 68 jurisdictions have cleared the merger, including the U.S. Department of Justice, the European Commission, and the United Kingdom's Competition and Markets Authority. Warner Bros. Discovery shareholders have also approved the combination.
None of that matters if the deal cannot close. A group of 12 state attorneys general and the Writers Guild of America filed litigation that has placed the merger on hold. The trial is headed to March, and Paramount has agreed to delay closing until five days after the trial outcome or June 1, 2027, whichever comes first.
The California attorney general has already canceled settlement talks with the studio, accusing Paramount of leaking details of the negotiations. That collapse pushed the dispute closer to a courtroom showdown rather than a negotiated resolution.
The financial pressure on both sides is real. Starting October 1, Paramount begins accruing a ticking fee of 25 cents per share, a cost that translates to $650 million per quarter, or roughly $7 million every single day the deal sits in limbo.
Paramount has asked the court to require the state attorneys general and the WGA to post a $1.9 billion bond to cover the ticking fee and financing costs during the delay. A hearing on that request is set for September 24.
If the deal collapses because of regulatory problems, Warner Bros. Discovery is entitled to a $7 billion termination fee, a staggering penalty that raises the stakes for every party involved. A two-day settlement conference is scheduled for October 14 and 15, though the track record of negotiations so far gives little reason for optimism.
David Ellison has threatened to move Paramount's operations out of California entirely if a settlement cannot be reached by the October 1 deadline. That threat carries weight. Paramount has operated in California for roughly a century, but the studio's leadership has signaled it is willing to walk away from the state rather than absorb open-ended litigation costs.
The merger has drawn attention from across the entertainment industry. Tom Cruise publicly backed the combination, vouching for commitments to theatrical film production. Others have been less supportive. Actor Mark Ruffalo drew sharp criticism from the ADL and the Simon Wiesenthal Center after tying the merger to the Israeli military, a claim that widened the controversy well beyond business and regulatory questions.
The broader media landscape adds context. Traditional studios argue they need consolidation to survive against tech giants with bottomless content budgets. That argument is not new, and it is not wrong on the numbers. But the question Americans should be asking is simpler: what does it mean when three Middle Eastern government-controlled funds collectively own more than a third of the non-voting equity in one of the country's most influential media companies?
The FCC says the stakes are non-voting. Team Telecom says the data protections are in place. The Ellison family and RedBird hold all the voting shares. On paper, editorial and operational control stays in American hands.
But equity is influence, even when it does not come with a ballot. The advance approval for each sovereign fund to grow its stake to 20 percent means the foreign share of this American media institution could climb higher without another public debate. The FCC's own ruling acknowledges that any change in voting rights would require a fresh review, an implicit admission that the line between passive investment and active influence is thinner than regulators like to pretend.
The immediate question is whether the litigation can be resolved before the financial damage becomes irreversible. At $7 million a day, every week of delay costs Paramount nearly $50 million. The $7 billion termination fee looms if the whole structure falls apart. And the state attorneys general, whose specific legal objections remain undisclosed in public reporting, show no sign of backing down.
A deal that has cleared 68 jurisdictions, passed a national security review, and won shareholder approval now depends on a settlement conference in mid-October and a trial months later. The regulatory boxes are checked. The courtroom fight is not.
When nearly half the equity in a storied American media company belongs to foreign investors, and the largest slice belongs to sovereign wealth funds answerable to Gulf monarchies, not shareholders, Americans deserve more than a bureaucratic finding that it serves "the public interest." They deserve to know exactly what was promised, to whom, and what happens when the next approval request lands on the FCC's desk.
