The new giant Paramount / Warner Bros. under strong foreign influence

Around 38.5% of the consortium’s shares will go to three Middle Eastern sovereign wealth funds.

The future juggernaut born from the merger between Paramount and Warner Bros. Discovery begins to reveal its financial behind-the-scenes. And they are far from trivial.

According to a document filed with the Federal Communications Commission (FCC), almost half of the new group’s capital – 49.5% – will be held by foreign investors. Even more striking: around 38.5% of the shares will go to three sovereign funds from the Middle East.

In detail, the Public Investment Fund of Saudi Arabia will hold 15.1% of the capital. The UAE’s sovereign wealth fund will own 12.8%, while the Qatar Investment Authority will rise to 10.6%. A massive presence, even if Paramount assures that these investors will have neither seats on the board of directors nor voting rights.

Because control will remain in the hands of David Ellison and his father Larry Ellison, associated with RedBird Capital Partners. Together, they will retain the majority of voting rights, or 100% of decision-making shares, according to the terms of the arrangement.

To complete the operation, Paramount Skydance mobilized nearly 24 billion dollars from these funds, including around 10 billion injected by Saudi Arabia. A strategic alliance which makes it possible to finance the colossal takeover of Warner Bros. Discovery, estimated at $111 billion (validated last week by the group’s shareholders).

There are still a few obstacles remaining. The deal must obtain the green light from European regulators, and could be subject to legal challenges in the United States. On the side of the Department of Justice, a first step has already been taken, but nothing prevents a subsequent challenge.

At the same time, Paramount contacted the FCC to obtain formal validation of this capital structure, which far exceeds the usual thresholds for foreign participation. An approach presented as “standard” by the group, and which does not condition the finalization of the agreement.

In its file, the studio requests in particular authorization to allow foreign investors to hold, indirectly, more than 25% of the capital, with the possibility of increasing up to 20% each in the future, as well as the validation of participations greater than 5% for some of them.

Paramount communicates on the purely technical nature of the approach, which in no way conditions the finalization of the acquisition of Warner Bros. Discovery. And above all, the message is political: despite the massive influx of foreign capital, control would remain entirely American.