Have DEI? The FCC May Block Your Merger. Just Ask Paramount.

Could the presence of DEI be enough to block a corporate merger?

The Federal Communications Commission (FCC) made headlines this week with a controversial announcement that could reshape the corporate landscape. Chairman Brendan Carr declared that the FCC would block merger proposals from companies practicing diversity, equity and inclusion (DEI) initiatives. In an interview Carr stated, “Any businesses that are looking for FCC approval, I would encourage them to get busy ending any sort of their invidious forms of DEI discrimination.”

This statement, while outside the FCC’s traditional regulatory mandate, aligns with the president’s broader agenda on dismantling DEI initiatives across the country’s private and public sectors. The implications around this message are vast and add more stress to both companies and DEI practitioners, who are looking for some solace with these ever-evolving DEI policies.

Paramount, which is awaiting FCC approval for its $8 billion proposed merger with Skydance, recently announced a rollback of its inclusion policies, citing the Trump administration’s moves as a driving factor: no longer using aspirational numerical goals related to the race, ethnicity, sex or gender of hires and ending the collecting of race, ethnicity, sex or gender data for U.S. job applicants on its forms and careers page.

The change was stark, as Paramount has been a leader in promoting diversity in Hollywood, championing initiatives to increase representation on-screen through programming as well as behind the scenes, through programs designed to diversify writers, directors and producers.

However, this much different. Even while boards are voting against anti-DEI polices this quarter, the stakes of losing FCC approval for its merger with Skydance appear to outweigh any commitments to DEI.

The FCC’s primary mandate is the regulation of interstate and international communications to ensure fair competition and protect consumers. Historically, the FCC has focused on issues like spectrum allocation, net neutrality, and consumer protection—not corporate hiring practices or inclusion policies. With the new directive to scrutinize said practices to approve mergers, the agency is taking a significant departure from its traditional role.

Companies Must Balance Diversity And Revenue Risks

The FCC’s announcement is being talked about, particularly for companies with pending mergers or acquisitions. Corporate boardrooms and executive teams will need to traverse this new landscape, by weighing the risks of maintaining their DEI teams and initiatives against the potential fallout of revising their DEI policies—or abandoning their efforts completely.

This rollback is not an isolated incident. Disney, who is not in merger talks, was notified today that they will be getting a letter from the FCC, which will be investigating the company’s DEI efforts.

Across industries, companies are grappling with how to balance their previously made commitments with the growing regulatory and political pressures to abandon them. The pendulum, which swung far toward inclusion in the wake of George Floyd’s murder in 2020, is now swinging back in full force in the opposite direction.

The FCC’s stance could set a dangerous precedent, discouraging companies from pursuing DEI initiatives further, out of fear of regulatory repercussions. To safeguard progress, businesses must find innovative ways to uphold their values while contending with this new reality.

3 Ways Companies Can Navigate the New DEI

For companies that are in the middle of this reality, here are three strategies to consider that will allow you to keep your practitioners engaged and valued:

1. Silent Inclusion. As I’ve written before, the future of DEI may lie in “invisible” programs—quiet, bespoke initiatives that achieve inclusion goals without drawing public or regulatory scrutiny. This approach allows companies to maintain their values while mitigating risk.
2. Focus on ESG. Internationally, diversity is often placed within the broader context of Environmental, Social and Governance (ESG) metrics. By tying inclusion efforts to measurable business outcomes, companies can make a compelling case for the programs’ value without triggering political backlash.
3. Community Engagement. Partnering with community organizations can provide external validation for inclusion efforts, demonstrating their impact beyond the corporate sphere. This grassroots approach can help build goodwill and counteract negative narratives.

The Road Ahead = Balance of Brand Reputation & Politics

Critics argue that the FCC’s move is an overreach, leveraging regulatory power to enforce political ideology. Moves like this challenge the separation of powers and the politicization of regulatory agencies. But supporters see this as a necessary step to combat what is perceived as “reverse discrimination” in corporate America. They argue that DEI initiatives, while well-intentioned, have created unfair advantages for certain groups at the expense of others.

The directive also raises broader questions about the role of government in shaping corporate culture. Should regulatory agencies have the power to dictate how companies approach diversity and inclusion? And what does this mean for the future of workplace equity in America? The risk is that this policy could stifle innovation and creativity, which thrive in diverse environments. Research has consistently shown that diverse teams outperform their homogenous counterparts, driving better decision-making, increased profitability, and greater employee satisfaction. By discouraging DEI initiatives, the FCC’s directive could inadvertently undermine the very competitiveness it seeks to protect. To make matters more complicated, the FCC also controls the content we all view across our devices.

The stakes are high for corporate America, as they must now navigate a complex web of regulatory, political and social pressures, all while staying true to their values.

The brands that thrive in this environment will be those that keep this reality in perspective, and leverage adversity not as a roadblock but instead as an opportunity to innovate and lead. The future of DEI in America hangs in the balance, and the decisions made today will shape the corporate landscape for years to come.