Paramount close to agreement on Gulf state funding for WBD acquisition

Paramount Skydance is reportedly inching closer to securing investment from three sovereign wealth funds in the Gulf region to support its intended purchase of Warner Bros. Discovery, as mentioned in a Sunday piece in the Wall Street Journal.

According to the article, the company is aiming to obtain equity pledges totaling nearly $24 billion, with Saudi Arabia's Public Investment Fund agreeing to invest roughly $10 billion. 

The negotiations, which also involve Qatar Investment Authority and Abu Dhabi’s L’imad Holding Co., could potentially lead to a signed deal as early as Monday.

This development follows Democratic lawmakers expressing worries over national security due to foreign investment and sponsorship of the merger. 

Last month, several senators urged FCC chairman Brendan Carr to carry out a “full and independent” evaluation of Paramount's planned $81 billion acquisition due to investments from Arab states. 

However, Carr mentioned that the agency's oversight would be limited since this deal does not involve the transfer of broadcast station ownership.

In their open letter, Democratic leaders referenced a section of the Communications Act, stating that without commission approval, foreign parties cannot own more than 25% of a US company’s equity or voting rights if the company holds a license.

On the other hand, Paramount has insisted that the deal does not need a review by the Committee on Foreign Investment because the Gulf investors will not have control over the corporation.

An earlier attempt at Paramount’s takeover involved financial support from Chinese technology giant Tencent and Jared Kushner's private equity firm Affinity Partners.

Both have since opted out, with Tencent withdrawing earlier to prevent triggering a Foreign Investment review.

The anticipated support from Gulf investors will help cover expenses incurred by Paramount Skydance's chair and CEO David Ellison and his billionaire father, Oracle co-founder Larry Ellison.

Other investors include RedBird Capital Partners, Bank of America, Citigroup, and asset management firm Apollo Global Management.

As for WBD, they have scheduled a special shareholder meeting on April 23 to vote on the company’s sale to the newly formed entity Paramount Skydance, marking a significant advancement in the process.