The Center for American Rights is renewing its call for the Federal Communications Commission to look into Skydance Media’s relationship with China’s Tencent Holdings as the agency’s review of the David Ellison-owned studio’s pending $8 billion merger with Paramount Global continues.
In a petition filed last month, the non-profit, which describes itself as a “non-partisan, public-interest law firm,” said Tencent’s investment in Skydance raises “troubling questions about undue foreign influence from China.”
Skydance and Paramount proceeded to ask the FCC to dismiss the firm’s objections to the merger, arguing that the allegations of Chinese influence have “no factual foundation and are legally unavailing” and that Tencent’s “entirely passive, non-attributable, minority interests present no basis for concern about undue influence.”
But in a new filing on Tuesday, CAR urged the FCC to coordinate with the Committee on Foreign Investment in the United States (CFIUS) or other national security agencies to review the transaction after the U.S. Department of Defense designated Tencent as a “Chinese military company.”
“The five-percent foreign ownership threshold is a general presumption,
not a hard-and-fast rule. That one of Skydance’s founding investors is identified by the U.S. Department of Defense as a ‘Chinese military company’ should refute the presumption under these circumstances,” CAR wrote.
Tencent, which also holds stakes in video game publishers like Riot Games, Epic Games and Ubisoft, has called the designation a “mistake,” noting it is “neither a Chinese military company nor a military-civil fusion contributor to the Chinese defense industrial base.”
“The Company intends to initiate a Reconsideration Process to correct this mistake,” the company added. “During the process, it will engage in discussions with the U.S. Department of Defense to resolve any misunderstanding, and if necessary, will undertake legal proceedings to remove the Company from the CMC List. The Company will make further announcement(s) as and when appropriate.”
In addition to targeting Skydance’s relationship with Tencent, the Center for American Rights — which filed a “news distortion” complaint against CBS over a “60 Minutes” interview with Vice President Kamala Harris — has also claimed that CBS News has “exhibited improper ideological bias” and that CBS Television has “apparently engaged in illegal racial quotas for its hiring.”
Incoming FCC chairman Brendan Carr has said CAR’s complaint against CBS is “something that is likely to arise in the context” of the agency’s review of the transaction.
CAR has asked that approval of the merger be conditioned upon Paramount’s commitment that it will avoid foreign influence and promote viewpoint diversity. Skydance and Paramount have argued that the viewpoint neutrality condition would “improperly encroach on broadcasters’ editorial discretion” and violate the First Amendment.
In its new filing, CAR said New Paramount could meet the condition without interference from the FCC by adding board members from different
geographies, industries, backgrounds and political persuasions; creating an “independent, empowered, balanced ombudsman” similar to Meta’s Oversight board; putting executive and editorial staff in cities besides New York and Los Angeles to “ensure a balanced set of viewpoints”; and committing to an “ideologically diverse hiring pipeline.”
“These are just four suggestions for ways that New Paramount could voluntarily
demonstrate its commitment to fulfilling its public-interest obligations to achieve
viewpoint diversity. The company or the Commission may be able to brainstorm other steps that are more than just verbal commitments to broad principles, as important as those are, but are concrete and actionable,” the firm added. “The goal is the same: Not to have the Commission direct or police individual editorial decisions, but to see structures that give the Commission confidence the entire public’s interest is being served by the applicant. And none of these steps threaten the First Amendment or exceed the Commission’s statutory mandate.”
The Paramount-Skydance deal is on track to close in the first half of 2025. The FCC’s review is required due to a transfer of broadcast licenses in connection with the transaction.
If the consummation of the transaction does not occur before April 7, subject to two automatic 90-day extensions, or if a regulator blocks the merger, both Paramount and Skydance can terminate the deal, per the deal’s S4 prospectus filed with the U.S. Securities and Exchange Commission. Exercising that option would leave Paramount on the hook to pay Skydance a $400 million breakup fee.
Paramount shares are down 20% in the past year, 8.6% in the past six months and 0.05% year to date.
