Paramount Skydance (PSKY) shares closed Friday at $10.21, down 41 cents or 3.9%, a day after the Federal Communications Commission (FCC) approved the foreign-ownership structure tied to its proposed acquisition of Warner Bros. Discovery (WBD). The decline came despite the regulatory green light, as investors focused on lingering legal and financial hurdles.
Trading volume was exceptionally heavy, with 78.6 million shares changing hands—roughly 6.5 times the stock's three-month average of 12 million shares. Warner Bros. Discovery also slipped, ending at $27.80, down 44 cents or 1.6%. The FCC ruling removes uncertainty around a large pool of foreign capital, but it does not resolve the state antitrust case that currently prevents the companies from closing. Friday's decline is therefore better read as a reminder of the remaining timetable and financing risk than as evidence that the FCC decision itself was negative.
What the FCC Actually Approved
The FCC's Media Bureau allowed indirect foreign equity ownership of Paramount to exceed the usual 25% benchmark and authorized as much as 100% in aggregate. Paramount told the agency that foreign-owned Class B shares were expected to represent about 49.5% of its equity after the planned investment. The order specifically approved stakes of 15.1% for Saudi Arabia's Public Investment Fund, 12.8% through the L'Imad chain associated with Abu Dhabi, and 10.6% through the Qatar Investment Authority chain. Those percentages describe ownership through related entity chains and should not be added across every named subsidiary.
Each named foreign investor also received advance approval to raise its indirect equity interest to a noncontrolling 20%. The safeguards matter: the shares are nonvoting, the investors have no governance or information rights, and they cannot influence Paramount's content or management or access nonpublic U.S. personal data. Any proposed change to those rights requires a new FCC petition.
This proceeding arose because Paramount controls CBS broadcast licenses. It was not another antitrust review of the Warner Bros. transaction. Paramount had already said on Aug. 14 that it had satisfied the merger agreement's regulatory conditions after securing clearances in 68 jurisdictions. The company called the lawsuit brought by 12 state attorneys general the final obstacle.
The Court Case Still Controls the Clock
The states allege that the combination would reduce competition in film and television. Under a July stipulation described by the New York attorney general, Paramount and Warner Bros. must remain separate until five days after a ruling on the merits or June 1, 2027, whichever comes first. The FCC order changes neither that injunction nor the states' case.
That distinction explains why the deal spread remains wide. Paramount has agreed to pay $31 in cash for each WBD share. Against Friday's $27.80 close, the $3.20 difference equals a 10.3% gross spread before the ticking fee, by TS2's calculation. WBD holders are due an additional $0.00277778 per share for each day after Sept. 30 that the deal remains open, capped at 25 cents per 90-day period.
PSKY's Less Visible Risk: The Break Fee
Paramount's latest quarterly filing says it would owe WBD a $7 billion termination fee if the acquisition fails for specified regulatory reasons or because an antitrust court order blocks closing. The Ellison parties have agreed to fund that payment in exchange for newly issued PSKY Class B shares priced at $16.02.
At that contractual price, funding the $7 billion fee alone would require roughly 437 million shares, a TS2 calculation. The issue price is well above Friday's market price, but the prospective increase in share count is still consequential. It gives PSKY investors a direct reason to care about the states' case even though the FCC has now accepted the foreign capital structure.
The 6.5-times volume ratio does not prove that traders sold because of the FCC news. Friday was also a quarterly derivatives-expiration session, which can produce large mechanical flows, and both stocks had other deal-related risks in their prices. The cleaner signal is the absence of a sustained relief rally after a favorable federal decision. The next hard dates are Sept. 30, when the ticking fee begins to accrue, and the court timetable that keeps closing blocked into 2027 unless the states and the companies reach an earlier resolution.
