(Jan 9): Money manager Mario Gabelli is asking a judge to make the film and TV company Paramount Global hand over files about its merger with Skydance Media so investors can tell what controlling stockholder Shari Redstone is getting in the deal and whether it’s fair.

Gabelli, whose funds own about 12% of Paramount voting shares, says the company has refused to turn over records that would show whether Redstone’s gains, through the sale of her National Amusements Inc (NAI), improperly disadvantage Paramount’s minority shareholders based on Delaware corporate law.

“Skydance plans to purchase NAI’s controlling stake in Paramount for an enormous premium, siphoning value away from other shareholders,” according to a filing by a Gabelli fund in Delaware Chancery Court unsealed on Jan 6. Paramount and National Amusements “have offered no transparency into the valuation of NAI,” the filing said.

The document fight is one of several hurdles the parties need to clear before they can complete the deal, including federal regulatory approval for the transfer of broadcast licences. They have said they hope to close as soon as the end of March or early April. The filing marks Gabelli’s latest demand for document production from Paramount — the owner of CBS, MTV and other media properties — which it has said is moving at a “glacial pace”.

To access internal company files in Delaware, shareholders must show a proper purpose for seeking the information. Such actions, known as books-and-records cases, are heard on an expedited basis and are sometimes the prelude to a lawsuit. 

Gabelli is likely seeking to determine whether Redstone is getting an unfair indirect premium for her control of Paramount through National Amusements and how any premium was negotiated, said Larry Hamermesh, a retired University of Pennsylvania law professor who is an expert on Delaware corporate law.

Paramount and a representative for Redstone declined to comment on the filing.

The dispute arose after Paramount agreed in July to merge with producer David Ellison’s Skydance. Ellison — the son of billionaire Larry Ellison, co-founder of software maker Oracle Corp — is to become chief executive officer of Paramount. 

The Ellison family and RedBird Capital Partners have agreed to invest more than US$8 billion (RM35.98 billion) in the business. That includes US$1.5 billion to help pay down Paramount’s debt, US$4.5 billion to buy shares of Paramount, and the purchase of Redstone’s National Amusements. The deal puts National Amusements’ enterprise value at US$2.4 billion, which includes US$1.75 billion in equity, according to a company statement.

In the filing, Gabelli cites severance and related benefits it says Redstone would get under the deal.

“The US$180 million severance and other payments being offered to Shari Redstone may be diverting assets from Paramount shareholders’ merger consideration,” it says.

In November, Gabelli asked the Federal Communications Commission to delay ruling on the Skydance-Paramount deal until its funds complete an inquiry into “potential insider wrongdoing” in connection with the transaction, according to legal filings.

The acquisition has drawn the attention of incoming Republican FCC chair Brendan Carr, who suggested in late 2024 he was interested in investigating CBS’ editing of a Kamala Harris 60 Minutes interview as part of his review of the deal. 

Gabelli isn’t the only one upset about Redstone’s potential payout. Latino-owned media company Fuse Media has expressed concern to federal regulators about how much Redstone stands to gain in the merger. Paramount and Skydance said in a regulatory filing last week that critics of the deal have failed to show it will harm them. 

National Amusements includes the Redstone family’s original source of wealth, a chain of movie theatres founded about a century ago. Sumner Redstone, Shari’s father, joined the company in the 1950s and turned it into a media conglomerate.

Gabelli also asked for documents on the Paramount deal last year.

The case is Gabelli Value 25 Fund v Paramount Global, 2024-1353, Delaware Chancery Court (Wilmington).

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