The European Commission is scrutinizing the financing structure behind the Paramount-Warner Bros. Discovery merger, focusing on foreign investment from several Middle Eastern sovereign wealth funds. This investigation targets compliance with the EU’s Foreign Subsidies Regulation and runs alongside the commission’s broader Phase 1 merger review.

The $110 billion deal involves significant overseas equity participation, with foreign investors expected to hold just under half of the combined company's equity. Among them, three Middle Eastern sovereign wealth funds are poised to collectively control a sizable portion of the non-voting shares. Saudi Arabia’s Public Investment Fund is set to hold the largest stake, followed by L’Imad Holding Company and the Qatar Investment Authority. These investors are not expected to receive governance rights or board representation, as the company has emphasized the absence of control transfer despite indirect majority equity holdings.

Additional scrutiny comes from regulatory bodies in other jurisdictions. In the United States, the Federal Communications Commission (FCC) is reviewing the merger’s foreign ownership components, while the U.K.’s Competition and Markets Authority (CMA) is assessing whether the transaction warrants a deeper Phase 2 investigation. The U.S. Department of Justice (DOJ) completed its initial Hart-Scott-Rodino review but remains vigilant, and multiple state attorneys general are preparing legal challenges on competitive grounds.

Paramount’s leadership has actively engaged with regulators across regions. The company’s representatives previously met with officials from the U.K. Secretary of Culture, Media and Sport and discussed benefits of the merger in meetings with European and U.S. antitrust authorities. Despite these efforts, opposition from state attorneys general in the U.S. is mounting, with several states considering lawsuits aimed at blocking the deal over concerns of market competition and concentration.

The EU investigation, set to deliver preliminary findings by mid-July, separates foreign investment concerns from the overall merger approval process, underscoring the growing scrutiny in Europe over external financial influences in major corporate consolidations.

  • Three Middle Eastern sovereign wealth funds will own about 38.5% of non-voting equity: Saudi Arabia’s Public Investment Fund, L’Imad Holding Company, and Qatar Investment Authority.
  • Foreign investors collectively expected to hold around 49.5% of equity, including passive partners linked to RedBird Capital and other overseas Class B stockholders.
  • The EC’s foreign subsidies probe runs concurrently with its Phase 1 merger review, with deadlines in early and mid-July respectively.
  • U.S. FCC and U.K. CMA reviews target foreign influence and competition impacts.
  • Approximately 10 U.S. state attorneys general are preparing lawsuits challenging the merger on antitrust grounds.