By WYATTE GRANTHAM-PHILIPS, AP Business Writer<\/p>\n
CHICAGO (AP) \u2014 As Paramount looks to take over Warner Bros. Discovery<\/a>, it\u2019s racked up billions of dollars in financial backing from three Gulf countries. And the U.S. Federal Communications Commission has now approved the company\u2019s ask for sizeable indirect ownership from those foreign investors.<\/p>\n The FCC cleared the way on Thursday, granting sovereign wealth funds from Saudi Arabia, Qatar and the United Arab Emirates to hold indirect equity interests in a Paramount-Warner combo, but no voting stakes.<\/p>\n Skydance-owned<\/a> Paramount \u2014 whose $81 billion merger with Warner is still on hold<\/a> amid a separate antitrust battle with twelve states<\/a> and Hollywood writers<\/a> \u2014 welcomed the FCC\u2019s ruling. Paramount maintained that these funds won\u2019t have any governance rights and the family of its CEO David Ellison and RedBird Capital would still be the majority owners of the combined company, which it said \u201cwill have the scale and resources necessary\u201d to compete worldwide.<\/p>\n Still, critics have called the move unprecedented \u2014 and argue that amount of money exchanging hands still opens the door to behind-the-scenes influence, particularly when it comes to core news operations like Paramount\u2019s CBS and Warner\u2019s CNN.<\/p>\n Paramount comes under the FCC\u2019s purview because its owns CBS and numerous broadcast TV affiliates across the U.S. And Saudi\u2019s Public Investment Fund, L\u2019imad Holding Company in the UAE and the Qatar Investment Authority reportedly committed a combined $24 billion<\/a> to help fund the company\u2019s Warner acquisition. In its spring petition to the FCC, Paramount disclosed that it expected those funds to indirectly own nearly 50% of equity interests when and if the merger closes.<\/p>\n That already well surpasses a 25% foreign ownership threshold that requires the FCC\u2019s greenlight, but the company asked for clearance of up to 100% indirect equity interests to account for potential future investments \u2014 which the regulator granted.<\/p>\n David Brown, chief of video division in the FCC\u2019s Media Bureau, concluded Thursday that giving Paramount access to more capital would strengthen the broadcast industry and was therefore \u201cin the public interest.\u201d He added that his team was persuaded by Paramount\u2019s assertions that the foreign investors would \u201cnot be able to wield any influence, let alone control, over decisions\u201d regarding its broadcast stations.<\/p>\n But others quickly decried the move and warned of future ramifications \u2014 including Anna Gomez, the FCC\u2019s sole Democratic Commissioner<\/a>.<\/p>\n \u201cThe FCC just let some of the most repressive governments in the world indirectly control nearly all of a combined Paramount-Warner Bros,\u201d Gomez wrote on social media<\/a> shortly after Thursday\u2019s ruling. She added that an investment of this size \u201cdoesn\u2019t just buy equity, it secures influence over what gets said and made.\u201d<\/p>\n Gomez sounded the alarm about Paramount\u2019s Gulf funding earlier this year, warning of potential influence from \u201cforeign governments with documented records of press suppression.\u201d She pointed in particular Saudi\u2019s Public Investment Fund controlled by Crown Prince Mohammed bin Salman, who U.S. intelligence previously found<\/a> ordered the 2018 killing of Washington Post journalist Jamal Khashoggi.<\/p>\n On Thursday, Gomez noted she had called for a full Commission vote \u2014 but that the FCC had instead \u201csnuck this ruling out as a staff-level decision\u201d with \u201cno accountability for a call of this magnitude.\u201d She indicated she would share more soon.<\/p>\n A handful of lawmakers have also scrutinized the sovereign funds\u2019 involvement in recent months, including Democratic Senators Elizabeth Warren and Maria Cantwell \u2014 among those who wrote a May letter<\/a> to FCC chairman Brendan Carr<\/a> to raise \u201cserious concerns\u201d as well.<\/p>\n Carr, who was appointed by Republican President Donald Trump<\/a>, had been broadly supportive of the Paramount-Warner tie-up since it was announced. In March, he told CNBC<\/a> that the FCC\u2019s regulatory role, if any, would be minimal \u2014 but that he thought it was a \u201cgood deal\u201d that should get through \u201cpretty quickly.\u201d<\/p>\n Even if the company hadn\u2019t received the FCC\u2019s sign off for the Gulf funds\u2019 equity stakes, the Warner merger wouldn\u2019t necessarily be knocked of the table (the Ellisons and RedBird might just be on the hook for more money). But the funding still secures a sizeable cash infusion for the deal \u2014 which, including billions of dollars in debt, is currently valued at nearly $111 billion based on outstanding shares.<\/p>\n Thursday\u2019s ruling arrives after Paramount has already touted foreign investment clearances from other countries<\/a>, as well required greenlights for the core antitrust reviews on its Warner merger \u2014 including from the Trump administration\u2019s Justice Department in the U.S.<\/a><\/p>\n But California and 11 other states sued to block the deal<\/a>, arguing that a Paramount-Warner combo \u201cextinguish competition\u201d in Hollywood and lead to fewer choices for consumers, particularly cinemagoers and cable customers. The Writers Guild of America<\/a> also filed suit.<\/p>\n