The European Commission opened a formal investigation into Paramount Global's proposed acquisition of Warner Bros. Discovery, targeting the $24 billion in capital commitments from three Middle Eastern sovereign wealth funds. The probe marks the first direct regulatory challenge to the deal structure since Skydance Media's Ellison family and RedBird Capital Partners announced the transaction in October.
Brussels disclosed the investigation without prior warning on Tuesday, citing concerns over indirect foreign ownership approaching 49.5 percent of the combined entity's equity. The filing names funds from Abu Dhabi, Qatar, and Saudi Arabia as principal subjects of review. Paramount had requested FCC approval for the ownership structure in January, acknowledging that foreign capital would constitute nearly half the equity base while the Ellisons and RedBird retain voting control through a separate share class. California Congressman Sam Liccardo separately urged the FCC to deny that request outright, calling the foreign ownership concentration a national security consideration.
The regulatory timing matters for three reasons. First, the EU's parallel review creates a secondary approval pathway that could delay close by six to nine months, pushing the transaction into late 2025 or early 2026. Second, the investigation signals Brussels intends to scrutinize Gulf capital in U.S. media acquisitions more aggressively than Washington has historically done, particularly when combined assets include news operations, film libraries, and streaming infrastructure across NATO markets. Third, the probe arrives as Warner Bros. Discovery carries $41 billion in net debt and Paramount operates under pressure from Skydance to accelerate cost synergies. Any extension of the approval timeline increases refinancing risk and integration complexity.
Operators should watch three developments. The EU will issue preliminary findings within 90 days, likely by mid-June, which will clarify whether Brussels seeks structural remedies—such as reduced foreign ownership below 40 percent—or behavioral commitments around content licensing and distribution. The FCC's decision on Paramount's foreign ownership petition is expected by late May. If either body imposes conditions, the Ellison-RedBird consortium will need to renegotiate capital commitments with the three sovereign funds, potentially requiring bridge financing or alternative equity sources. Watch for any public statements from Abu Dhabi's Mubadala or Qatar Investment Authority regarding their willingness to accept diluted positions.
The transaction was already structured with $6.8 billion in cash consideration to Paramount shareholders and assumption of debt. The Middle Eastern funds were expected to provide growth capital for the combined streaming platform and international expansion. Brussels now holds the timeline.