Ellisons seek approval to let Gulf backers own half of Paramount-Warners

Paramount Skydance has made a request to the Federal Communications Commission (FCC) to allow foreign investors to own almost 50% of the company that will exist if its acquisition of Warner Bros is successful.

In addition, David Ellison’s firm is asking the regulator to pre-approve a scenario in which his Gulf state backers could boost their equity stakes in the Hollywood studio, as well as their voting control, to as much as 20% each. US law restricts foreign investors – either singly or as a group – from owning more than 25% of a company that owns a broadcast licence unless the FCC deems it in the public interest.

Foreign investors are providing $24bn to back the bid, which would give them 49.5% of a merged Paramount-Warners. Roughly three-quarters of that capital comes from the sovereign wealth funds of the UAE, Qatar, and Saudi Arabia.

Ellison and his father, Larry, must come up with $47.2bn in equity and more than $60bn in debt financing to pull off the $111bn deal. To get it over the line, Ellison Sr had to shoulder the $47bn equity backstop himself.

“The Ellisons provided a guarantee to the Warners board that they would prefer not to action because they’d have to sell $40bn of Oracle stock,” explains media analyst Alice Enders. “The stakes are really high for the Ellisons. Even if they do secure the approval, Gulf sovereign wealth funds are not like the Norwegian [sovereign wealth] fund. They are tools of the ruling family.”

The value of Oracle stock has fallen 14% this week. The company pivoted from its traditional software business in September, signing a five-year cloud computing agreement deal with OpenAI to build AI infrastructure. But a report this week in the Wall Street Journal that OpenAI is failing to hit its earnings targets dented faith in the AI infrastructure boom, and has had a damaging knock-on for Oracle’s valuation.

Ellison has told the FCC his family would retain full control of Paramount-Warners and has expressed confidence that the deal will be approved. The family hosted a private dinner for Trump before the chaotic White House Correspondents Dinner last week and Ellison Jr also dined at the White House on Tuesday. But Paramount must also gain the consent of regulators in markets where it conducts business, including Europe.

The bid faces a string of additional challenges. The Justice Department is separately reviewing whether the merger violates US antitrust laws, while state attorneys general, including California’s Rob Bonta, are examining the transaction. Bonta has already said that it “raises red flags”.

More than 4,000 film-makers and actors, including Ben Stiller, Jane Fonda, JJ Abrams and Damon Lindelof, have signed an open letter calling for regulators to block the deal, saying it “would reduce the number of major US film studios to just four”.

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