Wall Street mogul Mario Gabelli has slammed the potential merger between Paramount and Skydance Media, saying he wants to see through Paramount’s exit negotiations in its entirety, the Post reported.
The legendary investor, through super voting stock and Paramount common stock, is the company’s second-largest voting shareholder behind media heiress Shari Redstone. , added in an exclusive interview with the Post that he also opposes the sale of Paramount to Apollo Global Management. He offered $26 billion.
“There’s no question that it’s better not to sell,” Gabelli told the Post in an interview Friday.
Paramount’s board last week agreed to enter into exclusive merger negotiations with Skydance, led by CEO David Ellison, son of Oracle co-founder Larry Ellison, and Apollo. He favored independent studios over a $26 billion offer from the company.
As part of the deal, Skydance, which produced blockbusters for Paramount such as “Mission: Impossible – Dead Reckoning” and “Top Gun: Maverick,” is a privately held company that owns nearly 80% of Redstone. The company will acquire shares in National Amusement Company. Paramount Global’s voting stock is available for about $2 billion.
But Gabelli told the Post he wants to stick with Paramount President and CEO Bob Bakish’s turnaround strategy.
“I’m a big believer in what Bakish is doing. I think he can do it and I think the stock’s value will increase significantly,” Gabelli said.
As of Friday, the company’s stock was trading around $11 per share, well below its 52-week high of $24 per share.
Gabelli said he expects the stock to recover to $28 by the end of this year and $41 by 2027 even without the sale.
Gabelli said it’s clear that Redstone has had to make financial decisions, but Paramount has maintained its independence by selling its television channels, including CBS, Comedy Central, MTV and BET Media Group. He said he thought it would be better to pay off the debt.
Mr. Redstone put BET Media Group up for auction last year, but he called off the sale after bids from potential buyers, including media mogul Tyler Perry, were disappointing.
Media mogul Byron Allen made a bid at Redstone’s asking price of about $3 billion, but it was unclear whether he would be able to raise the funds.
Mr. Allen has also expressed interest in buying Paramount’s cable channels for $14 billion.
“They’ll find a way to let Byron Allen get a TV channel and deleverage,” Gabelli said.
Gabelli also said he liked Hollywood studio Lionsgate’s efforts to merge itself with a special acquisition vehicle and spin off its Starz movie channel.
He believes EBITDA (earnings before interest, taxes, depreciation, and amortization) for Paramount’s various television networks will decline by about 10% to $4.3 billion between now and 2027 due to the cord-cutting.
Gabelli expects the big growth will be directly on the consumer side.
The streaming business, which includes Paramount Plus, will break even in 2026 and be profitable the following year, generating more than $600 million in EBITDA, he said.
Additionally, in 2027, Paramount’s television and streaming businesses (including Showtime) will be worth roughly the same amount of $19 billion each, he said, adding that the studio will be profitable this year and will be worth $1.8 billion in 2027. He added that he believed it would be worth the dollar value.
Gabelli joined a growing number of shareholders opposing the Skydance deal earlier this week, saying customers who owned voting stock might not get a premium if the deal goes through. He expressed frustration at the fact.
“The idea that National Amusements is getting a premium for its voting stock is completely legitimate,” Gabelli said. Los Angeles Times on wednesday. “The question is the amount. My clients want to be treated like voting stock. All voting stock should be treated equally.”
He went further on Thursday, saying: Reuters: “If Shari sells the voting stock and my client doesn’t get it, I have no choice but to file a lawsuit.”
Paramount Global shareholders have increasingly spoken out against the deal, arguing that a merger with Skydance would primarily benefit Redstone and threatening legal action. .
Earlier this week, news broke that four board members – Nicole Seligman, Dawn Ostroff, Frederick Terrell and Rob Krieger – were scheduled to resign at the annual general meeting on June 4th, and Skydance and Concerns about the takeover were heightened.
The paper said at least one departing director also expressed concerns about a potential acquisition with Skydance.
“We are not surprised, but we cannot think of a stronger statement on the proposed Skydance acquisition,” Loop Capital analyst Alan Gould said in a note Thursday about the board’s situation.
At least three funds have publicly shared angry letters to Matrix Asset Advisors and Paramount calling a potential deal with Skydance “detrimental” to the company.
Matrix said it was “particularly galling” that Paramount’s board did not seriously consider Apollo’s proposal due to reported concerns about deal funding.
On Friday, Barrington Capital also asked Paramount to consider Apollo’s offer.
But shareholder anger may just be a distraction.
Redstone needs a Paramount special committee to approve the merger, but Paramount’s independent shareholders, including Gabelli, likely won’t, people familiar with the matter said.
If a merger they don’t like is approved, shareholders are likely to sue Paramount and possibly its directors, but it would be very difficult to block the merger, the people said.
Another scenario for Redstone that is less discussed could be refinancing.
A person close to Redstone’s holding company, National Amusements, said NAI’s creditors could refinance the company’s $180 million in debt if Redstone requested it before the May 2025 principal repayment deadline. He said it was highly sexual.
Representatives for Redstone and Paramount declined to comment.
