Billionaire Mario Gabelli, the largest voting shareholder in the holding company that controls Paramount, said he might remain an investor if the media giant were to merge with Skydance, despite previously being skeptical of such a partnership.
Earlier this week, heir Shari Redstone surprised media members by announcing that she would accept a merger proposal from Skydance, the Hollywood studio with which Paramount partners to produce the Mission: Impossible series, despite having rejected the deal just weeks earlier.
“Shari did the right thing,” Gabelli told The Washington Post in an exclusive interview on Friday. “She stepped aside and got something much more attractive.”
In particular, Gabelli said the new deal with Skydance appears to be better for minority shareholders, including Gabelli, a previous sticking point.
Under the new arrangement, National Amusements, the holding company that controls Paramount’s voting shares (Redstone owns 77 percent of the stock, with Gabelli owning the majority of the remainder), does not require that a merger with Paramount be approved by a majority of shareholders other than Redstone.
The savvy media investor has remained largely silent during negotiations over the past few months, but sources believe Gabelli’s threats of legal action over the Skydance deal were a major obstacle to reaching a deal.
“If there is a deal with Skydance, we may not sell our shares. We need to see how the deal is structured,” Gabelli said, adding that he had no opinion on a merger at this time. “We are on hold until we know the details of this deal.”
But Gabelli said that on the surface, the numbers look favorable.
“If Skydance pays NAI $1.75 billion and NAI takes on $500 million in debt, that leaves NAI shareholders with $1.25 billion — or $20 per share,” Gabelli said.
Paramount shares rose 0.5% to trade at $11.52 on Friday.
Gabelli said he won’t be traveling to the annual “summer camp for billionaires” in Sun Valley next week, but he’ll be interested to see who Shari meets there.
He will be particularly interested to see whether Redstone is spotted meeting with David Zaslav, the CEO of Warner Bros. Discovery, who has expressed intermittent interest in doing a deal with Paramount.
“Zaslav wants to do something one-on-one with Shari because Netflix has a great advantage over both of them,” Gabelli said.
But he also noted there was still doubt about whether Skydance would be able to win the contract from the Federal Communications Commission.
“Under current law, any change in ownership of 25 percent requires FCC approval.”
The century-old Paramount Pictures is known for films such as “Titanic,” “The Godfather” and the “Transformers” series.
Skydance CEO David Ellison, son of Oracle co-founder Larry Ellison, had reportedly been trying for months to secure the Paramount deal, and Redstone, daughter of media mogul Sumner Redstone, was an enthusiastic supporter of the deal.
Still, she rejected the original deal after Skydance adjusted its proposal to provide more funding to other shareholders.
National Amusements owns cinemas in the United States, the United Kingdom and Latin America and holds 77% of the Class A voting stock of Paramount, which is owned by the Redstone family.
Ariel Zilber contributed reporting.
