Democrats threaten to unravel Paramount power grab post-Trump

Democrats have threatened to unravel Paramount’s proposed takeover of Warner Bros once Donald Trump, the US president, is out of power.Warner Bros had agreed to an $83bn (£62bn) takeover by Netflix for its studio and streaming networks but is now fending off a power grab by Paramount, which has taken its offer straight to shareholders.Two Democratic Representatives have written to the board of Warner Bros Discovery and to Scott Bessent, the US treasury secretary, to raise concerns about the Hollywood studios being sold to a buyer backed by foreign powers.Paramount’s $108bn hostile bid is primarily funded by the sovereign wealth funds of Saudi Arabia, Abu Dhabi and Qatar.In the letter, seen by Semafor, Sam Liccardo and Ayanna Pressley wrote: “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.“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.”Together, the Gulf states are contributing $24bn to the bid – double the amount that Paramount’s main shareholders, the Ellison family, are putting in and accounting for almost three fifths of the total equity.Jared Kushner, Mr Trump’s son-in-law, is also backing the bid through his investment firm, Affinity Partners.Paramount has insisted that the three wealth funds – as well as Mr Kushner – will forgo any governance rights as part of the deal, including board seats.It has insisted that this puts its bid outside the scope of the committee on foreign investment in the United States (CFIUS), which reviews the potential threat of investments to national security.But the two Democrats, who both sit on the US House committee on financial services, warned that any failure to seek a CFIUS investigation would represent a “serious lapse in fiduciary judgment” that could “expose the company to significant regulatory and reputational harm”.They added: “These 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.“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.”The threat underscores the political sensitivities around the future of Warner Bros.While Democrats are currently unable to intervene in the deal, an expected period of lengthy regulatory scrutiny means it may drag on towards the next presidential election in 2028.David Ellison, the chairman and chief executive of Paramount, has reportedly met with Warner investors to boost his chances of a deal, which is for the entire company.Paramount is now said to be considering increasing its offer.So far, it has tabled a bid of $30 per share – compared to Netflix’s $27.75 offer – but analysts think the studio giant could increase this to as much as $35.