Will he or won’t he?
That’s the question media insiders are now asking Paramount shareholder Mario Gabelli.
Specifically, the question is whether the mercurial billionaire will file a shareholder lawsuit to block the Skydance Redbird acquisition team’s buyout of the high-profile owners of Paramount Studios and CBS and extract a better deal for himself and his clients.
As a reporter who has covered the M&A business for decades, I have always been hesitant to report these lawsuits as “big news” — they are like ambulance-chasing lawsuits brought by disgruntled fringe investors.
Clearly, Gabelli is not one of those investors. He is one of the most accomplished investors in the media industry, with a track record that goes back longer than I’ve been covering this subject. He is a serious guy, and if he were to sue, it would not be without merit.
Securities lawyers who know Mr. Gabelli are confident he will sue, saying he is growing increasingly angry that the deal was negotiated in secret and that its terms were crafted without the input of investors like him.
Mr. Gabelli owns both Paramount common stock and so-called voting shares, the latter of which give the Redstone family, led by Shari Redstone, control of the entire company and its various assets, including major Hollywood studios CBS, MTV and BET. He is the largest single holder of non-voting shares.
Gabelli, meanwhile, told On the Money that he hasn’t made up his mind yet. He clarified that the lawsuit he recently filed in Delaware Chancery Court, the go-to place for resolving such disputes, “is not a lawsuit.” It’s more of a request for information.
“I just want full disclosure and I want information about how they arrived at the terms of the deal,” he said.
Under the terms of the deal, the Redstones will receive $1.75 billion, plus some legal protections in the event that people like Gabelli sue, and common shareholders will get a secure future as Skydance and Redbird inject capital and new management into the company.
The main problem, media industry insiders say, is that no one really knows the further terms of the deal. There will be a review period over the next month. But then again, who would bid on this and pay more for common shareholders without knowing what they’re bidding for?
So veteran telecom lawyers who advise companies in shareholder litigation are bracing for more action.
“I don’t think the soap opera is over yet,” he said. “Mr. Gabelli’s latest lawsuit is merely a technicality before a lawsuit can be filed.”
In other words, stay tuned for the next episode where Gabelli goes to war for his own gain.
