Where Worries Arise in the Paramount Deal

The pending sale of Warner Brothers’ broadcasting and entertainment assets to the Paramount Skydance group breaks new ground in the long-sensitive area of eligible owners and concentration of ownership in these critical fields. There is comparatively little concern about concentration of ownership in films and various other fields of entertainment such as comedy. Where worries arise is in the plausibility of the arrangement that the new buyers of the combined group, including members of the governing families of Saudi Arabia, the United Arab Emirates, and Qatar, could in certain circumstances end up owning all of the shares in the vast Paramount-Warner combination of companies, but must not have any voting shares or any influence on operations. The foreign investors could still acquire voting rights in the merged company if the Federal Communications Commission were to say okay. There is no history of any such ownership structure, and it is hard to imagine circumstances in which, if there were a serious management policy difference, the owners of all of the equity could not make an equitable argument in justice to accord themselves some influence on specific decision-making. Ownership has its rights irrespective of the identity of the owners.The sensitivity is acute because the combined enterprise would include the ownership of the CBS television and radio network and the original Cable News Network, CNN. Both these networks have been, especially prior to CBS’s acquisition by Paramount, unambiguously liberal and unwaveringly hostile to President Trump and his administration, and generally antagonistic to Israel.The complexities begin with the fact that the Middle Eastern investors, via the nations’ sovereign wealth funds, are also the governments of the three countries mentioned. And while the United Arab Emirates are now one of the closest allies of the United States, more closely cooperating and objectively useful than any of the members of the North Atlantic Treaty with the possible exception of Poland, Middle Eastern political events are notoriously subject to change. It is not unreasonable to ask if, despite the safeguards that have been inserted into the shareholding arrangements, it would not be possible for the interests of governments in the world’s most volatile region to be at stark variance to those of the United States, even as they tendentiously feed the news to a significant percentage of Americans.Qatar has been a prominent financial supporter of terrorism and although it has recently contributed a luxury aircraft to the United States for the president’s use and is investing substantially in America, it retains close and valuable relations with the Islamic Republic of Iran, hosts Hamas, and is in the running, despite its current investment in the United States, to be the most politically unreliable wealthy country in the world. The Saudis are larger and made of sterner stuff, but even though they have frequently been subject to missile attack from Iran, they have yet to withdraw their ambassador from that country. Historically Saudi Arabia was a joint venture between the nomadic House of Saud and the extreme Wahabi militant Muslim establishment. Under pressure presented in the form of the clear political and economic interest of the country, the Saudis have reduced their support for militant Islam, but the thought of putting any significant element of the American broadcasting and entertainment industries within the reach of powerful and unpredictable authoritarian Muslim powers is a legitimate subject of concern. America has come full circle from when there was widespread concern that the Washington Post and the New York Times and CBS were all under the supposedly Jewish influences of Kay Graham, Arthur Ochs “Punch” Sulzberger, and William Paley. This was nonsense, as none of them was a particularly fervent Jew, and I attended Kay Graham’s funeral at the National Cathedral, and none of them were particularly pro-Israel. Yet they were influential in a time when almost all American press influence was concentrated in three main networks, several newspapers, and a couple of newsmagazines. To be sure, this has changed completely, and no organization, including the Paramount Skydance-Warner amalgam now taking place, reaches more than a small minority of the whole country in any way to influence political opinion or attitudes toward minority groups.A management system based upon the complete separation of ownership and an apparently self-perpetuating management group, though, invites skepticism. In this case, the unifying figure appears to be the long-time eminence at Goldman Sachs, John Thornton. Currently a co-chairman of the Asia Society and the chairman of RedBird Capital Partners, and a member of Paramount’s board of directors, Mr. Thornton was strongly identified with the Communist Chinese and has now apparently become something of a guru to the petro-Arabs. There is nothing discreditable in this background to suggest that Mr. Thornton might be wielding irresponsibly the level of influence that he may be about to have on American affairs. Yet there is useful room for concern about the structure of this impending Paramount-Warner arrangement. The FCC could strengthen the country’s confidence with a defensive monitoring system to assure reasonable opinion that these important outlets run no chance of undermining the national interest.

Where Worries Arise in the Paramount Deal

Where Worries Arise in the Paramount Deal

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