The proposed acquisition of Paramount Global by Apollo Global Management and Sony faces significant regulatory hurdles due to antitrust concerns. As the deal aims to combine Paramount’s extensive media assets with those of Apollo and Sony, it has drawn scrutiny from Democratic-led federal regulators. approval.
Antitrust Concerns and Regulatory Scrutiny
The bid to acquire Paramount Global, which owns the CBS network, its Hollywood studio, and local stations across the United States, raises red flags for antitrust regulators. With Apollo’s existing ownership of TV channels reaching 11% of US households through its stake in Cox Media Group, the combined entity’s reach would far exceed the FCC’s 39% cap on the reach by local affiliates. This poses a challenge to circumvent regulatory restrictions and gain approval from federal regulators.
FCC’s Ownership Rules and UHF Discount
Apollo is banking on an arcane FCC loophole called the “UHF Discount” to mitigate concerns over exceeding ownership caps. This discount, which halves the percentage of households counted by stations with channels in the UHF bandwidth, has been reinstated despite previous revocations. However, there is uncertainty surrounding the future of the UHF Discount, as FCC Chair Jessica Rosenworcel considers it outdated and may advocate for its elimination. Without this discount, the combined company’s reach would surpass regulatory thresholds, prompting potential divestments or regulatory interventions.
 CFIUS and FTC Scrutiny
Apart from FCC regulations, the bid could face scrutiny from the Committee on Foreign Investment in the US (CFIUS), particularly regarding Sony’s ownership of CBS. Additionally, the Federal Trade Commission (FTC) may intervene to prevent Sony, with its existing film division, from acquiring another movie studio. These regulatory bodies play a crucial role in assessing the competitive implications of mergers and acquisitions in the media industry, ensuring fair competition and consumer welfare.
Challenges for Private Equity Ownership:
The prospect of a private equity firm like Apollo obtaining ownership of a major broadcast network raises concerns among regulators and industry experts. The FCC’s reluctance to approve previous private equity-backed media ownership deals, such as the proposed merger between Standard General and Tegna, underscores the challenges faced by Apollo in gaining regulatory approval. Moreover, concerns regarding media diversity and representation add complexity to the regulatory review process, as evidenced by the FCC’s preference for diverse ownership structures.
The regulatory landscape and the FCC’s cautious approach to media ownership deals indicate a prolonged approval process for the Apollo-Sony bid. The FCC’s discretion in interpreting ownership rules and its ability to delay merger reviews suggest potential roadblocks ahead. With regulatory decisions influenced by factors such as media diversity, competition, and national security considerations, the approval timeline remains uncertain, posing challenges for stakeholders involved in the deal. The proposed acquisition of Paramount Global by Apollo Global Management and Sony faces formidable regulatory hurdles, including antitrust concerns, FCC ownership rules, and scrutiny from CFIUS and the FTC. Despite efforts to navigate regulatory complexities, uncertainties surrounding the UHF Discount, private equity ownership, and regulatory approval timelines loom large. As the regulatory review process unfolds, stakeholders will closely monitor developments and adapt their strategies accordingly in pursuit of a successful deal outcome.
