Investing.com -- Paramount Global (NASDAQ: PARA) shares dropped 1.5% following comments from Congressman John Moolenaar, who called for a review of the company's merger with Skydance Media by the Committee on Foreign Investment in the United States (CFIUS). The lawmaker's concerns stem from the involvement of China's Tencent Holdings Ltd (F:NNND)., a recent addition to a U.S. military blacklist, in the deal.
According to Bloomberg, Moolenaar, who chairs the House China Select Committee, expressed worries on Wednesday regarding potential Chinese influence on the American entertainment industry through Tencent's stake in Skydance. He cited instances of self-censorship within Hollywood to appease the Chinese Communist Party and urged CFIUS to examine the merger closely.
Paramount, which owns CBS, announced its merger agreement with film and TV producer Skydance Media in July. The scrutiny comes at a time when the U.S. Department of Defense has designated Tencent as a Chinese military company, raising red flags about the tech and entertainment giant's investments in the U.S.
The call for CFIUS review has cast a shadow over Paramount's stock, signaling investor apprehension about the potential regulatory hurdles the merger could face. Paramount and Skydance have not publicly responded to Moolenaar's statement at the time of reporting.
The decline in Paramount's shares reflects the market's sensitivity to geopolitical tensions and regulatory challenges, especially when they involve significant foreign investments. The outcome of any CFIUS review could have implications for the future of the merger and Paramount's strategic direction.
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