Paramount has mostly been out of the news lately, but that doesn’t mean there’s nothing going on behind the scenes in its years-long attempt to sell itself before reaching a deal on a merger with Skydance Media.
As is already known, Paramount owner Shari Redstone paid a significant sum, almost $2 billion, before agreeing to a deal with the independent studio. by David AllisonCreator of “Top Gun: Maverick” and son of oracle Co-founder Larry Ellison.
What is less known is how much anger this complex deal has caused among other shareholders, who believe they have been stiffed in the process. The generational wealth was transferred to the ruling Redstone family. Other shareholders, on a relative basis, received pennies on the dollar.
One of the largest shareholders, the famously cantankerous money manager Mario Gabelli, told me that his representatives are taking definite steps to put things right.
they have been meeting Major Law Firm The deal can best be described as early-stage negotiations to prosecute the new combined company and obtain a larger payout for its clients.
Most have controlling “Class A” shares, similar to Redstone, but many also have “Class B” or non-voting common stock. They fear that they are all going to be treated like roadkill as a result of the nearly $28 billion deal for Paramount, one of the world’s most prestigious media franchises.
Gabelli is no fool; He has been successfully managing money longer than 41-year-old David Ellison. He is one of those great value investors who does thorough research into companies to extract the highest possible returns for his clients.
She has been eyeing a payout from her Paramount investment since speculation began at least two years ago that Shari might be looking to preserve some of her family’s fortune by selling her stake in the media company created by her late father Sumner Redstone. Need to sell controlling stake. Traditional media is gradually disappearing amid the decline of business.
anxious wait
“We are tired of waiting. , , “We can’t wait any longer,” he tells me, growing excited as we speak. “I’m talking to law firms, but one problem is finding a company that isn’t controversial because a lot of people work for Paramount.”
I’ve known Mario a long time, and an agitated Gabelli is not something Skydance needs as it tries to save a dying media empire that includes Paramount Studios, CBS and MTV.
Gabelli says that Paramount Global, which won’t officially be in Skydance’s hands until next year, is dragging its feet on disclosure (particularly with regard to Shari’s overall payment), other than providing very rudimentary deal terms. Used to be.
Does this mean he’s definitely getting sued?
Gabelli is keeping those cards close. His firm has filed a “220” notice in the courts to obtain Shari information. At least one shareholder lawsuit has been filed without doing the 220 dance.
They believe that taking the 220 route instead of merely filing will give them permanent protection from immediate dismissal.
The Delaware Court of Chancery, where such disputes are litigated, will frown upon filings without going through the disclosure process. He is also seeking a court-designated role as lead shareholder plaintiff.
Skydance will tell you that the deal is not as one-sided as Gabelli suggests. During the past five years, as cord-cutting and movie attendance declined, Paramount also nearly closed down.
Its entry into streaming was an expensive mess. The market value of its stock lost tens of billions of dollars. The company is barely profitable, and only because it has cut costs and headcount.
That’s why the entire deal, which was stalled repeatedly for several months as rival bidders were ousted, is yet to be completed.
True, there weren’t very many actual bidders, except for Ellison (which might tell you something about the media business), who had the bucks to meet Shari’s money demands – about $2 billion and other perks – And what little capital there was to try to recover was a significantly decaying asset.
Being the son of Larry Ellison, one of the richest men in the world, you get that luxury.
And their people remind me, they’re paying real money for this thing.
David Ellison and his partners at Redbird Capital argue, and I firmly believe, that they have done a lot during long negotiations to appease people like Gabelli.
difficult media landscape
Class B Commons Can Sell Some Paramount stock plunges after Edgar Bronfman Jr.’s sudden exit from bidding warFor $15, which is a premium from their current price of about $10.
Controlling Class A shareholders get $23 or the opportunity to convert their shares into Class B common. All shareholders have the opportunity to participate in the growth as Skydance injects money into the new, better company.
LightShed Ventures media analyst Rich Greenfield, who has been covering the Paramount deal saga since the beginning, emphasizes that in addition to better terms, shareholders like Gabelli need to consider the media landscape, which includes unstable business and Volatile stock prices are involved. Disney and Warner Bros. Discovery.
“Without this transaction, Paramount would have been a $5 stock, so good luck suing,” Greenfield said in an interview. “When you consider the alternatives, and how negative investors are on the sector, this looks like a winner for investors.”
