The Controversy Surrounding Paramount’s Merger with Skydance

The pending merger between Paramount and Skydance has stirred up controversy, with major shareholder Mario Gabelli pressing for more information about the deal. Gabelli, who has been a shareholder of Paramount and its predecessor companies for decades, is seeking greater transparency regarding the financial data and valuation of National Amusements, Inc. The $8 billion two-step transaction, which involves Skydance taking control of NAI before merging with Paramount, is set to close in the third quarter of 2025.

Gabelli’s efforts to obtain more information have included posting on social media, where he referred to his initiative as “Operation fish bowl.” While he has not explicitly mentioned legal action, reports have surfaced that he may have made legal overtures to force Paramount to disclose more details about the merger. Despite rumors of a complaint being submitted in Delaware Chancery Court, no formal filing has been found in the court docket as of yet.

At the heart of Gabelli’s concerns is Paramount’s dual-class stock structure, which heavily favors Shari Redstone’s NAI that holds almost 80% of the company’s Class A shares. This imbalance has raised fears among Class B shareholders, including Gabelli, that they may be disadvantaged in the merger deal. Given the significant voting power held by NAI, there are concerns about the fairness of the deal to minority shareholders.

Skydance’s offer to Paramount, which includes a valuation of $4.75 billion and a $2.4 billion cash acquisition of National Amusements, has been met with skepticism from some shareholders. In an attempt to address these concerns, dealmakers have added various sweeteners to make the deal more attractive to Class B shareholders and reduce the likelihood of legal challenges. Indemnification, which protects against lawsuits, has become a key negotiating point in the merger discussions.

Gabelli’s quest for more information is not unique, as other shareholders have also raised similar concerns about the lack of transparency surrounding the deal. The Employees’ Retirement System of Rhode Island filed a complaint last May, echoing Gabelli’s calls for Paramount to release more documents related to the merger. These legal challenges highlight the contentious nature of the merger and the need for greater clarity and disclosure from the companies involved.

The controversy surrounding Paramount’s merger with Skydance underscores the importance of transparency and fairness in corporate transactions. Shareholders like Mario Gabelli are pushing for more information to ensure that their interests are protected in the deal. As the merger moves forward, it will be crucial for all parties involved to address these concerns and work towards a resolution that benefits all stakeholders.