The Federal Communications Commission approved Paramount Global's indirect ownership structure for Warner Bros. Discovery on Wednesday, allowing three Gulf sovereign wealth funds to hold combined stakes exceeding 35% of the merged entity without triggering foreign control restrictions. The ruling removes the primary regulatory obstacle to Paramount's $43 billion takeover bid, announced in April and now on track to close by March 2027.
Paramount secured $18 billion in equity commitments from funds controlled by Qatar Investment Authority, Abu Dhabi Investment Authority, and Saudi Arabia's Public Investment Fund. The FCC's waiver permits this concentration under a voting trust structure that caps Gulf fund voting power at 24.9% for broadcast license purposes while preserving their full economic interest. The arrangement mirrors frameworks used in previous media deals involving foreign capital, including Apollo's 2019 Cox Media stake and Searchlight Capital's 2021 Tribune Publishing investment. Warner Bros. Discovery's broadcast licenses in 42 markets now transfer without additional foreign ownership reviews.
The approval arrives six days after Paramount settled antitrust claims with attorneys general from eleven states, eliminating litigation that could have delayed the transaction until mid-2027 and imposed $340 million in breakup fees. The settlement requires Paramount to divest Warner Bros. Discovery's entire Max streaming technology stack to Netflix within 180 days of closing and to maintain separate news operations in overlapping markets for 24 months. Combined, the two clearances compress Paramount's regulatory timeline by roughly nine months compared to internal projections from June.
The structural implications extend beyond this transaction. The FCC's willingness to approve passive Gulf investment in U.S. broadcast assets at this scale creates precedent for sovereign funds seeking media exposure without operational control. Three pending deals—Apollo's $5.2 billion Tegna bid, Byron Allen's $14 billion Paramount Pictures carveout offer, and Nexstar's $2.7 billion acquisition of Gray Television's duopoly stations—all involve similar foreign capital questions. The commission's 24.9% voting threshold, paired with economic participation above 50%, now functions as the de facto structure for non-U.S. institutional capital in American broadcasting.
Allocators should monitor two near-term developments. First, Paramount's March 15 bondholder vote on the merger's debt assumption, where dissenting creditors holding more than 8% of the $15.2 billion in outstanding notes can trigger mandatory tender offers at 101 cents on the dollar. Second, Warner Bros. Discovery's February 6 earnings call, where management will disclose restructuring charges related to the Max divestiture and quantify expected synergies from the combined direct-to-consumer operation. Both events will clarify the post-merger capital structure before the anticipated March 28 close.
The FCC filing lists March 21 as the earliest possible closing date, contingent on Hart-Scott-Rodino waiting periods expiring without additional DOJ review. Paramount has not yet announced a definitive shareholder meeting date.