FCC chair calls Paramount/WBD merger “a lot cleaner” than defunct Netflix deal
FCC to review foreign debt, but Carr indicates it will be a formality.
Credit:
Getty Images | Kenneth Cheung
Paramount Skydance’s $111 billion purchase of Warner Bros. Discovery (WBD) has a notable supporter in Federal Communications Commission Chairman Brendan Carr. The FCC boss told CNBC today that the Paramount/WBD combination “is a lot cleaner” than the now-defunct Netflix deal to buy WBD.
Netflix “would have had a very difficult path forward from a regulatory perspective” because of “the scope and scale” of the streaming service that would have been created by combining Netflix with WBD property HBO Max, Carr said. There were “a lot of concerns in DC” about Netflix buying the company, he said.
Netflix backed out of its deal with Warner Bros. instead of matching the Paramount offer. Although Paramount plans to merge its own Paramount+ streaming service with HBO Max, Carr said the Paramount/WBD merger “does not raise at all the same types of concerns [as Netflix]. I think there’s some real consumer benefits that could emerge from it.”
Paramount Skydance is led by CEO David Ellison. His father, Larry Ellison, pledged $40 billion toward the deal. The Ellisons seem to have won President Trump’s backing for the merger.
The FCC plays a big role in reviewing mergers when broadcast licenses are transferred from one entity to another. There are no license transfers in this case because WBD doesn’t own any TV broadcast licenses.
But Paramount Skydance must comply with the FCC’s foreign ownership rules because it is already an FCC licensee with 28 local CBS stations that it owns and operates. Paramount is apparently financing the WBD purchase partly with money from foreign investors, which could trigger an FCC review of whether a foreign entity would gain control of a broadcaster.
Sovereign wealth funds back Paramount
In December, Paramount said that it lined up “an aggregate $24 billion commitment from three sovereign wealth funds” from Gulf countries, specifically Saudi Arabia, Abu Dhabi, and Qatar. Paramount said at the time that the sovereign wealth funds “agreed to forgo all governance rights (including board representation).”
Carr told the Financial Times yesterday that an FCC review of foreign debt is unlikely to hold up the merger. “All the information that I’ve seen about that foreign debt … is that would qualify under FCC rules as what we call bona fide debt, meaning it would be a very quick, almost pro forma review,” he said. FCC precedents state that bona fide debt may include a guarantee for a loan or a standard loan in which the creditor does not possess an ownership or voting interest in the licensee.
Carr told CNBC that the deal will be reviewed by the Justice Department, and that “if there’s any FCC role at all, it will be a pretty minimal role. I think this is a good deal and I think it should get through pretty quickly.”
The Justice Department is reviewing the merger and is not likely to try to block it, Bloomberg reported. “The agency is taking a softer stance on merger enforcement and hasn’t blocked a deal on antitrust grounds since President Donald Trump took office,” the article said. The deal would still face review by individual US states and regulators in other countries.
Paramount was cagey yesterday about whether sovereign funds are still backing the deal. “In government filings and on an investor call Monday, Paramount reiterated that the Ellisons and private-equity firm RedBird Capital Partners have pledged $47 billion toward the roughly $81 billion Paramount will pay to buy out WBD shareholders,” Business Insider wrote. “The rest will be financed with debt. But Paramount doesn’t say how much the Ellisons and RedBird intend to cough up themselves, and how much will come from other investors.”
Foreign ownership rule
Section 310 of the Communications Act imposes foreign ownership limits of 20 or 25 percent, depending on how the US-based licensee is structured. If the Paramount/WBD deal creates what’s called an “attributable interest” in the entity that holds FCC licenses, the merging companies would need to obtain a waiver, said Harold Feld, a telecom and media lawyer who is senior VP of advocacy group Public Knowledge.
If they’re “changing the corporate structure so that the foreign owners have what the FCC classifies as an attributable interest in the licenses, that would be a change of ownership under the FCC’s rules and would require FCC approval,” Feld told Ars. But if the foreign investment is only a passive interest with no real control over the company, it usually gets a rubber stamp without a difficult review, he said.
Carr’s statement to the Financial Times indicates that it will be a formality. Feld said that “it’s hard to tell whether [Carr] is saying that because the [Trump] administration approves the merger or whether he’s saying that because he’s actually been briefed by the buyers on the nature of the ownership change.”
Paramount has already been talking to regulators about getting the WBD deal approved. Paramount said it made “significant regulatory progress” before signing the deal with WBD and that there are “no statutory impediments to close in [the] US.”
Sen. Elizabeth Warren (D-Mass.) and other Democratic lawmakers alleged in a letter that “the entire process has been clouded by corruption concerns.” The letter to Attorney General Pam Bondi and White House Chief of Staff Susie Wiles said it appears that Trump administration officials discouraged Netflix’s bid in closed-door meetings “so that Paramount Skydance, the bidder reportedly favored by President Trump, could take over Warner Bros. instead.”
Since Warner Bros. properties like HBO Max and CNN offer programming outside the US, other countries’ regulators could try to block the merger. Paramount has started discussions with the European Commission, the firm said.
Paramount gave in to Trump and FCC demands
Trump and Carr have repeatedly criticized TV networks, including Paramount property CBS, for alleged bias. Paramount became the federal government’s preferred buyer of Warner Bros. after multiple instances in which the company acceded to Trump and FCC demands.
Trump sued Paramount because he didn’t like how CBS edited a pre-election interview with Kamala Harris and obtained a $16 million settlement from the company. Trump described the deal as “another in a long line of VICTORIES over the Fake News Media.”
The Paramount/Trump settlement was followed quickly by the FCC’s approval of Paramount’s $8 billion purchase of Skydance in July 2025. To get the merger approval, Paramount agreed to install an ombudsman that Carr described as a “bias monitor.” Carr now appears to be happy with Paramount and CBS management, saying that CBS is “doing a great job” under Ellison and CBS News Editor-in-Chief Bari Weiss.
Carr also seemed pleased with how CBS complied with his demand that late-night shows follow the equal-time rule, after an incident in which host Stephen Colbert alleged that he wasn’t allowed to air an interview with a Democratic politician. Talk shows have historically been exempted from the rule’s requirements, but CBS said it gave Colbert legal guidance on how the planned interview could trigger the equal-time rule after the Carr-led FCC issued a warning to TV broadcasters.
Although the Trump administration appears likely to green-light the Paramount/WBD deal, state governments may not be so quick to approve it. California Attorney General Rob Bonta said, “Paramount/Warner Bros is not a done deal. These two Hollywood titans have not cleared regulatory scrutiny — the California Department of Justice has an open investigation, and we intend to be vigorous in our review.”
Jon is a Senior IT Reporter for Ars Technica. He covers the telecom industry, Federal Communications Commission rulemakings, broadband consumer affairs, court cases, and government regulation of the tech industry.
