(Bloomberg) -- Fuse Media, a Latino-owned entertainment company, has become the latest party to raise objections to the pending Skydance-Paramount merger, suggesting to a federal regulator that Paramount Chair Shari Redstone would be overpaid in the deal, to the detriment of the media business.
In a filing with the Federal Communications Commission, reviewed by Bloomberg News, Fuse echoed concerns raised by money manager Mario Gabelli that Redstone is receiving a higher premium than other Class A shareholders. The new company could better spend that money “investing in operational functions, such as the production of local news or general entertainment content,” Fuse wrote. “This would be contrary to the Commission’s charge to promote localism, viewpoint diversity, and the public interest generally.”
Skydance Media and Paramount Global are merging via a series of transactions. Skydance founder David Ellison, the son of Oracle Corp. founder Larry Ellison, and partner RedBird Capital Partners are buying out the Redstone family’s National Amusements Inc., which owns the majority of the voting stock in Paramount.
In October, the Ellison family told the FCC that the younger Ellison would control the family’s voting interest in the combined company. The FCC said the changes represented “major amendments” that merited a fresh public comment cycle, opening the door for Gabelli to request a delay in deal approval while he investigates whether the terms are unfair to Paramount’s minority investors.
Fuse added that the combined entity would have greater power to prioritize its own streaming content over independent programmers, such as Fuse Media. The company called out Paramount’s Pluto TV, a free, ad-supported streaming service, which it said “apparently uses its position as a key video distribution platform to identify promising third party content, create or modify its own proprietary version, and discriminate in favor of its own services.”
Fuse compared Pluto to Amazon.com Inc.’s marketplace, which it said also abuses its position to prioritize its own services. “Just as Amazon plays a critical role for independent retailers engaged in online commerce, Pluto TV is critical to the future of video programmers like Fuse,” the company said in the complaint.
The comments add to a small but growing chorus of deal critics.
The International Brotherhood of Teamsters and other labor unions recently pressed Skydance and Paramount to make strong, clear commitments to support workers’ rights and avoid layoffs.
Further complicating the matter are comments by incoming Republican FCC Chairman Brendan Carr, who suggested on Fox Business last month that he’d probe CBS’ editing of a Kamala Harris interview on 60 Minutes in the context of the Skydance-Paramount merger.
When Paramount Global and David Ellison’s Skydance agreed to merge in July, the deal didn’t appear to raise regulatory red flags, at least on its face. The proposed change in Paramount’s local station ownership, which triggers FCC review, doesn’t run afoul of the agency’s media ownership rules.
(Updates wity comments about Pluto platform from fifth paragraph.)
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