Paramount Skydance indicates Tencent Holdings, the Chinese gaming and social-media giant, pulled out of its bid to acquire Warner Bros Discovery in order to sidestep a potential national security review.
In a revised filing with the U.S. Securities and Exchange Commission, Paramount disclosed that Tencent dropped its $1 billion financing commitment after concerns arose that the funding would originate from a source outside the United States, potentially triggering a review by the Committee on Foreign Investment in the United States (CFIUS). Notably, CFIUS or FCC approval wasn’t a stated condition of the bid.
The SEC filing, dated Monday, also revealed that foreign sovereign wealth funds from Saudi Arabia, Abu Dhabi, and Qatar—together providing $24 billion for Paramount’s bid—agreed to relinquish their rights to participate in Warner Bros’ management to help minimize additional scrutiny.
Earlier this week, Paramount launched a hostile takeover bid valued at approximately $77.9 billion for Warner Bros. Discovery, positioning itself against Netflix in the race to own the company behind HBO, CNN, and a storied film studio.
This type of deal, especially when foreign entities are involved, can attract national-security review by CFIUS, a U.S. government panel chaired by the Treasury Secretary. CFIUS has the authority to require changes to ownership structures or even mandate divestment from the U.S.
The push to tighten oversight of foreign investment has gained momentum under both President Biden and former President Trump, with the Treasury Department expanding its powers amid rising security concerns.
Tencent, based in Shenzhen’s tech-and-financial hub, has links to several prominent U.S. entertainment brands and owns Riot Games, the developer behind League of Legends. It also maintains a streaming agreement with the NBA and operates WeChat, a dominant messaging and payments platform in China and among Chinese communities abroad. Tencent’s market value is reported to exceed $700 billion on Hong Kong’s exchange.
There was no immediate statement from Tencent regarding the bid.
