The Scoop
As the battle over Warner Bros. Discovery grows, two Democratic lawmakers are warning that their party may try to block or unravel any acquisition by Paramount when it returns to power.
In a letter to the WBD board and Treasury Secretary Scott Bessent first shared with Semafor, Reps. Sam Liccardo, D-Calif., and Ayanna Pressley, D-Mass., said they were concerned about the national security risk of letting foreign entities control a large portion of the US entertainment and media industry.
They also hinted that a future Democratic Congress and administration could try to unravel any Paramount-WBD deal.
“Future Congresses … will review many of the decisions of the current Administration, and may recommend that regulators push for divestitures, which would undermine the strategic logic of this merger,” they wrote.
“We urge the Board to weigh these national security and regulatory liabilities in evaluating a transaction burdened by uncertain but potentially extensive mitigation obligations, foreign influence risks, or adverse regulatory action.”
Liccardo’s national security worry stems from the Gulf investors backing Paramount’s all-cash hostile bid for WBD, which include sovereign wealth funds from Saudi Arabia, Qatar, and Abu Dhabi.
He and Pressley, who both sit on the House Financial Services Committee, added that a failure by WBD and the administration to seek a review of Paramount’s bid by the interagency Committee on Foreign Investment In the United States would represent “a serious lapse in fiduciary judgment and could expose the company to significant regulatory and reputational harm.”
“These [foreign] investors, by virtue of their financial position or contractual rights, could obtain Influence — direct or indirect — over business decisions that bear upon editorial independence, content moderation, distribution priorities, or the stewardship of Americans’ private data,” Liccardo and Pressley wrote.
“Even absent overt control, such influence can present a national-security threat when foreign state-linked entities have strategic interests inconsistent with those of the United States.”
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Democrats currently have no formal regulatory or oversight power, and 2027 is the earliest they can hope to regain control of at least one chamber in Congress. In the meantime, Trump and its administration have shown virtually no interest in seriously considering Democrats’ regulatory concerns; several of the president’s allies are aligning with Paramount.
The Democrats’ letter acknowledges their party’s oversight limitations, but it signals a potential future interest in probing a Paramount deal even after it closes.
Paramount is hoping to avoid a CFIUS review of its bid for WBD by creating a governance structure that grants the foreign investors no voting rights, though it’s unclear whether the federal government will buy the argument.
Max’s view
The biggest media merger in years has clearly gotten the attention of Congress, where members of both parties are starting to take issue with rival bids from Paramount and Netflix.
Despite Paramount’s more Trump-friendly ownership, the concerns aren’t always along clear partisan lines. On the right, Senate Majority Leader John Thune said the Department of Justice needed to take a “hard look” at a Paramount-Warner tie-up, saying he had antitrust concerns about that combination. Republican Sen. Mike Lee told Semafor he has “grave doubts” about Netflix’s bid.
On the left, Sens. Chris Murphy of Connecticut and Sen. Elizabeth Warren of Massachusetts said both deals are anticompetitive and should probably be rejected by regulators.
As the lobbying effort to sway federal regulators and lawmakers heats up, the antipathy towards Paramount among Democrats is worth monitoring. Paramount chief Larry Ellison’s reported willingness to placate President Donald Trump’s desire to shape the news to his liking has clearly gotten under the skin of many in the party.
Still, a future Democratic administration’s breakup of the company is somewhat lower on the list of concerns for today’s WBD shareholders. Even if Democratic regulators get around to breaking up a deal, many shareholders will likely be long gone by the time that happens.
Notable
- Ellison took his case to WBD shareholders on Tuesday, we reported.