Democratic lawmakers say Paramount bid for Warner raises ‘serious national security concerns’
-
Click here to listen to this article - Share via
See more from the L.A. Times in Google Search. Set us as preferred
- Congressional Democrats raise national security concerns over Paramount’s hostile Warner Bros. bid, noting Middle Eastern sovereign wealth funds are providing over half the financing.
- The deal threatens control of CNN, HBO and Warner Bros. studios in Burbank, which shape news and cultural content for millions of Americans.
- Paramount’s hostile bid directly appeals to shareholders and throws into doubt the Warner board’s previous selection of Netflix’s competing $72-billion offer.
Congressional Democrats are sounding alarms over the deep involvement of Saudi Arabian and other Middle Eastern royal families in Paramount’s proposed bid for Warner Bros. Discovery.
Warner Bros. Discovery owns CNN, HBO and the Warner Bros. film and television studios in Burbank behind such beloved American classics as “Casablanca,” “Citizen Kane” and Bugs Bunny, and blockbuster hits including “Harry Potter,” “Dirty Harry,” “The Matrix” and “Friends.”
Late last week, Paramount, which is controlled by billionaire Larry Ellison’s family, came up short in the bidding for Warner Bros., in part over the Warner board’s concerns about the financing of the deal. On Monday, Paramount launched a hostile takeover of Warner Bros., appealing directly to Warner shareholders — asking them to sell their stock to Paramount for $30 a share.
On Wednesday, Paramount sent a letter to Warner shareholders asking that they tender their shares, which would allow Paramount to acquire the company through its hostile takeover.
In the letter to Warner shareholders, Ellison’s son, David, who is Paramount’s chairman, wrote: “Our public offer ... delivers superior value and a faster, more certain path to completion than the transaction announced with Netflix.”
It added that Paramount’s offer would be “financed by $41 billion of new equity backstopped by the Ellison family and RedBird Capital and $54 billion of debt commitments from Bank of America, Citi and Apollo.”
It did not disclose that the sovereign wealth funds were the majority of the new equity. Paramount’s gambit has thrown the auction, and the Warner board’s selection of Netflix’s $72-billion deal, into doubt.
Tech mogul Larry Ellison made a bold move to acquire Warner Bros. Discovery, but lost out to Netflix, setting the stage for a legal fight that could shape the future of Hollywood.
Paramount has long insisted that it represents the best partner for Warner Bros., in part because of the Ellison family’s cozy relations with President Trump. The company has trumpeted its ability to gain the blessing of the Trump administration for its proposed deal.
Paramount’s bid is heavily backed by the sovereign funds of Saudi Arabia, Abu Dhabi and Qatar. The three royal families have agreed to contribute $24 billion — twice the amount the Larry Ellison family has said it would provide in financing for Paramount’s proposed $78-billion takeover of Warner Bros. Discovery, according to regulatory filings.
Trump son-in-law Jared Kushner’s private equity firm, Affinity Partners, would also have an ownership stake.
On Wednesday, U.S. Reps. Sam Liccardo (D-San José) and Ayanna Pressley (D-Mass.) called on the Warner Bros. board to recognize the consequences of selling the company, which includes news organization CNN, to billionaire foreign rulers.
“This transaction raises national security concerns because it could transfer substantial influence over one of the largest American media companies to foreign-backed financiers,” Liccardo and Pressley wrote in a Wednesday letter to Warner Bros. Discovery Chief Executive David Zaslav.
Tech mogul Larry Ellison made a bold move to acquire Warner Bros. Discovery, but lost out to Netflix, setting the stage for a legal fight that could shape the future of Hollywood.
“Warner’s platforms reach tens of millions of American households through HBO, Max, CNN, Warner Bros. Pictures, Discovery, and numerous digital and cable properties,” the lawmakers wrote. “They also shape the news, entertainment, and cultural content consumed by the American public.”
The concerns adds a new wrinkle to the Warner Bros. auction, which already had political overtones. Trump has said he planned to be involved in the decision-making, and he’s offered praise for both Larry and David Ellison and Netflix co-Chief Executive Ted Sarandos, who has visited with the president leading up to last week’s auction deadline.
Transactions involving “foreign investors with governance rights, access to non-public data, or indirect influence over content distribution [create] vulnerabilities that foreign governments could exploit,” the lawmakers wrote. They asked the Warner board, should it opt for Paramount, to agree to a federal review of the transaction to determine whether the involvement of the Middle Eastern investors would pose a national security risk. Treasury Secretary Scott Bessent would lead any such review.
Paramount, in its regulatory filings, said the three Middle Eastern royal families had agreed to give up voting rights and a role in the company’s decision-making — despite contributing more than half the equity needed for the deal.
Paramount has said it would not be required to submit the proposed Warner transaction to the federal Committee on Foreign Investments in the U.S., or CFIUS, because the sovereign wealth funds have waived their governance rights, should the Ellison family prevail in the bidding for Warner Bros.
“Paramount might not need CFIUS but the American people do,” Liccardo said in an interview with The Times. “We need to ask ourselves: What is of value that would command a $24-billion investment from three royal families?”
Traditional film and TV production companies are part of “an industry that is struggling mightily,” Liccardo said. “So if you look at an acquisition like this ... if not for the going concern, what particular assets are of value? Consider the sensitive personal data of tens of millions of Americans, and ask how valuable that data might be?”
Paramount said it offered $30 a share in the final hours of last week’s auction. ‘We never heard back,’ says Paramount Chair David Ellison.
Representatives of Warner Bros. and Paramount declined to comment.
The Ellison family acquired Paramount in August. David Ellison, the chief executive, attended a White House dinner last month in honor of Saudi Crown Prince Mohammed bin Salman.
The involvement of Mohammed and his Saudi Public Investment Fund was concerning to the two lawmakers.
“The fund is controlled by Crown Prince Mohammed bin Salman, whom (according to the declassified 2021 report of the U.S. Director of National Intelligence) ordered the murder of U.S. resident and Washington Post journalist Jamal Khashoggi,” the lawmakers wrote.
They noted that Kushner’s Affinity Partners was also backed by a $2-billion investment from the Saudi Public Investment Fund. Paramount has not disclosed how much Kushner would contribute to the Paramount-Warner deal.
Liccardo’s Northern California district includes Los Gatos, where Netflix is based. Liccardo, in the interview, said Netflix was unaware of his effort until after the letter was drafted.
Over the weekend, Trump said the proposed Netflix purchase, which would give the streaming company an even more commanding presence in the industry, “could be a problem.” The president on Wednesday said he wanted CNN to be included in the deal because he doesn’t trust “the people that are running that company right now.”
Meanwhile, U.S. Sen. Chris Murphy (D-Conn.) has voiced concerns about Netflix’s dominance should it acquire Warner.
“The Netflix purchase of Warner Bros. would be a disaster,” Murphy wrote on X last weekend. “It’s patently illegal. But there are some quietly rooting for it because a Paramount takeover (that includes CNN) would be worse.”
