Paramount Shareholder Mario Gabelli Asks FCC To Delay Review Of Skydance Merger Pending His Request For More Financial Details

Longtime Paramount Global shareholder Mario Gabelli, who had agitated against iterations of the Skydance-Paramount merger deal, is stepping up his campaign for more transparency around the deal.

Lawyers for Gabelli, who operates an investment fund holding 12.5% of Paramount Class A shares and about 900,000 Class B shares, sent the Federal Communications Commission a letter regarding the matter. The letter, dated last Friday and made public on Tuesday, asks that the FCC‘s review of the deal be paused pending a more thorough review of its financials. The FCC must approve the transfer of CBS broadcast licenses to Skydance.

Gabelli has long harbored suspicions that Paramount chair and controlling shareholder Shari Redstone enriched herself at the expense of some shareholders in sealing the merger pact. He told Deadline last July he did not intend at that time to file a lawsuit seeking to block the deal and was merely doing his “fiduciary duty” to his investors. The FCC letter, though, represents a new round of saber-rattling.

Gabelli last July contacted Paramount management and also filed a complaint in Delaware Chancery Court asking for the company to clarify a number of financial aspects of the transaction. Gabelli told Deadline he wants to understand in more detail the components of a $2.4 billion payment being made by Skydance and its backers to Redstone’s National Amusements Inc. About 80% of voting control of Paramount belongs to NAI, but the company also owns movie theaters and other assets. Skydance and its backers are putting a total of $8 billion into the two-step transaction.

The letter to the FCC charges that a recent 600-plus-page proxy statement outlining the structure of the new company does not provide “adequate disclosures” as to the merger process or the deal’s “fairness.”

The Skydance merger “is not subject to a vote by minority stockholders and minority shareholders are only being offered non-voting shares in post-merger Paramount,” the letter continues. “This disenfranchises Class A holders who currently have voting rights and leaves the operation of these important media assets essentially unchecked.”

Any potential “fiduciary and/or federal securities violations” should therefore be considered by the commission before it gives its stamp of approval.

The merger is not expected to encounter major regulatory objections, but the presence of CBS in the portfolio increases the level of scrutiny the agreement will receive. Because Skydance does not have any linear TV assets, it is seen as less problematic than other Paramount suitors who pursued the company in recent months. But the pending changeover of administrations from President Biden to President-elect Trump has injected a degree of uncertainty into the M&A sector.