Paramount Global ( NASDAQ:PARA ) shares took over 2% hit today after U.S. lawmakers flagged concerns about its proposed merger with Skydance Media. The twist? Tencent Holdings, a Chinese tech giant now labeled a "Chinese military company" by the U.S. Department of Defense, holds a minor stake in the deal. Congressman John Moolenaar, chair of the House China Select Committee, didn't mince words, calling for a full-scale review by the Committee on Foreign Investment in the United States (CFIUS). He pointed to Hollywood's history of self-censorship to appease the Chinese Communist Party, sounding the alarm about the broader implications of Tencent's involvement in U.S. media.

The merger, which needs the FCC's blessing for transferring broadcast licenses, is already under a microscope. FCC member Brendan Carr, a vocal critic of Chinese influence, hinted at a deeper dive into national security concerns, saying, Nothing is off the table. Advocacy groups have jumped in too, warning regulators about Tencent's presence on the U.S. military blacklist. Paramount and Skydance have yet to respond, but analysts believe the deal still has a path forward, given Paramount's relatively low media ownership levels.

For investors, this is a front-row seat to how geopolitical tensions can rattle markets. Paramount's drop reflects the jitters around potential regulatory delays or conditions that could reshape the merger's trajectory. The stakes are highnot just for Paramount and Skydance, but for the future of foreign investment in sensitive U.S. industries. If CFIUS steps in, the decision could set the tone for how deals like this are handled moving forward.

This article first appeared on GuruFocus .