The months-long negotiations over the sale of the Paramount Media empire have been filled with an exhausting number of twists and turns and are not over yet.
Just ask Mario Gabelli.
The famous investor is one of the media giant’s largest shareholders, and while most of his clients hold common stock, or “B shares,” some also hold valuable “A shares,” or voting shares, owned by Shari, who would become the de facto owner of the company if the plan goes through.
And Gabelli, a Bronx-born billionaire who hasn’t quite let go of his “tough guy” roots, has no plans to go away quietly, On the Money reported.
“You know that Taylor Swift album, ‘The Distressed Poets Division,’ we’re the Distressed Analyst Division,” Gabelli told On the Money. “We search for value, we look for ways to make more money for our clients. We’ve been in this stock for years… All we want is transparency.”
The deal had an interesting provision: a 45-day “go-shop” period for someone to make a better offer, which was a way to gain immunity from shareholder lawsuits by signaling a willingness to accept a better offer.
Still, closing the deal could be problematic: The upfront payment was tiny for common shareholders, and aside from an improved balance sheet (more on that later), the stock has only risen slightly since the deal was announced and is still down nearly 30% this year.
That’s why Skydance and Redbird are reportedly meeting with sometimes-cranky investment professionals hoping to convince them that David Ellison, 41, the son of a Silicon Valley billionaire, and the media brass at his buyout firm, Redbird Capital, have the ability to turn around Paramount.
Good luck. Gabelli told me that he hasn’t heard from the Skydance team directly, other than being asked to join a conference call with analysts the day the deal was announced. And he doesn’t really care: He wants to make sure his customers aren’t getting ripped off before he signs off on the deal.
But first, Gabelli instructed his team to embark on what he called a “fishbowl strategy”: They wanted to know everything about the deals: who was making how much and what the benefits were for customers.
“This could be a great deal. I like what I’ve heard, but I want all the details. What if Shari gets $35 a share for this deal? I have a million clients who own B shares, some of whom own A shares. Firms like Vanguard and BlackRock aren’t going to fight for them.”
Jerry Cardinale, the veteran media banker who heads RedBird Capital, is a key backer of Skydance, the Hollywood studio that agreed to merge with Paramount in a historic but highly complex deal.
And he apparently understands Gabelli’s threat: My sources say he wanted to call the famous investor during deal negotiations to explain the value of a Skydance-Paramount partnership, but was warned not to call for legal reasons amid rumours of a shareholder lawsuit.
That’s all changed now, he told me. He would not comment on the Gabelli case, but he told me, “This has been the most difficult deal I’ve ever made in my career.”
But Cardinale says it’s well worth it, as he and Ellison may set the corporate template for the future of big media. The media industry is in the red and needs to find a way to survive. In an age of AI and technological innovation, Cardinale recognizes that the new Paramount, led by a new generation of media mogul David Ellison, may be a touchstone for the industry’s future.
That’s the long-term strategy. In the short term, cutting costs is the priority, he said, followed by figuring out how to leverage the two companies’ assets and relationships, such as the NFL, and technology to drive viewers to Paramount+.
“Paramount is one of the most iconic companies in the world, with a history spanning more than 100 years. It’s one of the big five studios. It has an incredible portfolio of assets… but it needs to be reimagined for the 21st century, and there’s still a lot of work to be done.”
Cardinale said there will be nearly $2 billion in cuts and asset sales like BET but not CBS, but the storied broadcast network won’t be immune to cost-cutting either, and we’ve heard the new owners haven’t been very protective of the network behind closed doors and haven’t completely ruled out a sale in the future.
