Three Democratic senators have written a letter to the FCC, asking that they hold off on approving Paramount’s acquisition of Warner Bros. Discovery until the government completes a review of foreign investment in the company.
Senator Cory Booker (D-NJ), Senator Adam Schiff (D-CA) and Senator Elizabeth Warren (D-MA) filed the letter on June 18, following an initial letter sent in March to raise concerns about foreign investment.
A month after that initial letter was filed, Paramount disclosed to the FCC that approximately 49.5% of the combined
Paramount and Warner Bros. Discovery company would be owned by foreign investors. The senators write that the number “is nearly
double the statutory threshold prohibiting foreign entities from holding more than 25 percent equity or voting interest in a U.S.-organized entity that controls an FCC-issued license without prior Commission approval.”
Paramount is now seeking FCC approval for allowing each foreign investor to later increase their stake to up to 20%, which could result in the entity being 100% owned by foreign investors. The senators say that goes against an FCC rules, which was clarified at the beginning of this year, which “explicitly limits the scope of advance approval available to foreign investors that hold deemed voting interests without actual de jure or de facto control.”
While Paramount claims that the move wouldn’t cause any national security concerns, the senators say that claim needs to be questioned. That questioning has begun, but the Committee for the Assessment of Foreign Participation in the United States Telecommunications
Services Sector won’t have time to review Paramount’s responses before the company’s intended July closing date for the deal.
The senators are now urging the FCC to formally tell Paramount that the deal cannot close until the commission can review details to determine if there is a potential national security threat.
The letter closed by saying “The Commission has an obligation to honestly answer a fundamental question: whether placing 49.5 percent of the equity in the parent company of CBS, CNN, and 28 broadcast television stations into the hands of three foreign governments serves the American public. We are prepared to pursue every available avenue—legislative, oversight, and legal—to ensure that it does.”