27-05-2025
The Last Great (Non-Government) Paramount (NASDAQ:PARA) / Skydance Roadblock: Mario Gabelli
For everyone who has been keeping score at home, you know like I do that the merger between entertainment giant Paramount (PARA) and Skydance is far from a done deal. While Paramount still, at last report, believes that the merger can be completed before June ends, there were still some issues left. The Federal Communications Commission (FCC) has not yet signed off. A lawsuit between Paramount and President Donald Trump is still in place. Two smaller lawsuits from Rhode Island and New York City pension funds are in the way.
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And then, there is Mario Gabelli. Gabelli represents investors who, together, own around 12.5% of Paramount's class A voting shares. This makes Gabelli head of the second-largest bloc of class A shareholders next to Shari Redstone. And Gabelli has been objecting to the merger almost since its inception, but not much has been heard on that front recently.
With that massive question mark in place, I went looking. I managed to find the contact information for Mr. Christopher Marangi, the co-CIO for GAMCO Investors, founded by Mario Gabelli himself. And over the course of several weeks, I managed to get Mr. Marangi to sit down for a few questions about the current state of the lawsuit, and just what was going on in relation to Mr. Gabelli's pursuit of Paramount.
The Question and Answer Portion
TipRanks: Back in July 2024, Mr. Gabelli brought in the lawsuit in Delaware's Chancery Court, seeking information to ensure investors got a worthwhile deal themselves. Paramount seemed concerned about that deal, to the point that reports noted that RedBird Capital's Gerry Cardinale was dispatched to speak to Mr. Gabelli personally about the matter. What was Mr. Gabelli hoping to find as a result of that case?
Marangi: As you are aware, National Amusements chose to conduct the sale of Paramount through a two-step process. In Step 1, NAI would sell themselves (along with the controlling interest in Paramount) to Skydance and in Step 2, Skydance would merge with Paramount.
As a practical matter, this had the effect of allowing Skydance/NAI to keep the price paid for NAI's Paramount stake confidential. In addition, the transaction was conducted without a shareholder vote which left GAMCO in the position of being forced to either take inferior stock (i.e. non-voting) in the merged company or cash that may have been deeply discounted from what NAI received.
GAMCO launched what it has called Project Fishbowl to gather information about the deal struck between National Amusements (NAI) and Skydance/RedBird, including the price NAI had secured for its voting A shares. Delaware has a mechanism under Section 220 of Delaware Corporate Law that allows shareholders like GAMCO to review books and records of the Corporation including related to these negotiations. The matter eventually went before the Chancery because GAMCO was dissatisfied with the materials they were provided under Section 220. The Delaware Chancery Court issued a ruling regarding our 220 investigation saying that Gabelli 'has stated and proved a credible basis to suspect wrongdoing' by Paramount in its books and records action.
TipRanks: As for the conversation between Mr. Gabelli and Gerry Cardinale, what topics did it cover? What actually came out of that conversation, if anything?
Marangi: No comment.
TipRanks: After that, in October 2024, reports from the New York Post noted that Mr. Gabelli was still taking meetings with lawyers in a bid to land 'a big payday for his clients.' But Mr. Gabelli also, the report noted, discovered that the lawyers in question were working for Paramount on one level or another. Has Mr. Gabelli managed to find a legal force that was sufficiently inclined to pursue Paramount, or is this still ongoing?
Marangi: GAMCO, on behalf of our clients, had retained highly skilled counsel that has extensive experience in dealing with similar matters.
TipRanks: In January 2025, a report from Bloomberg noted that Mr. Gabelli was looking for a set of files from Paramount, which were said to contain information on Shari Redstone's deal with Paramount / Skydance, and what she would specifically gain. Mr. Gabelli turned to a judge in said matter, as Paramount refused to hand over the files. A Quartz report from September 2024 revealed that Shari Redstone stood to make $530 million personally from the deal; has Mr. Gabelli's investigation found out anything contrary to that, or is that number accurate as it stands?
Marangi: See response to question 1. The price NAI received for its voting A shares remains undisclosed though based on publicly available data we continue to suspect it was in excess of the $23 per share non-NAI shareholders are being offered for their A stock.
TipRanks: After January 2025, information about Mr. Gabelli's pursuit of Paramount seems to have gone quiet. Where does his search stand today? Is there any hope of him preventing the Paramount / Skydance merger? Has he decided to abandon the pursuit altogether?
Marangi: The merger remains subject to regulatory review. The 220 matter was before the Delaware Court in April. GAMCO has also notified the FCC regarding its objection to the merger without additional disclosure. It is unlikely GAMCO, or any shareholder for that matter, would be able to prevent the merger. GAMCO will continue to evaluate its options to protect the interests of the more than 700 of its clients who own Paramount stock.
Overall? Not Much.
And that is where we stand today. Though the answers were, perhaps, not as definitive as we would have hoped: further planned legal action or an attempt to derail the merger—even Mr. Marangi acknowledges the unlikeliness of preventing the Paramount / Skydance merger—all seem comparatively impossible to reach.
But one thing is clear: at least now we know what the current state of affairs is. We also have a pretty good idea that any hope Paramount had of finishing the merger by July 4 is largely misplaced. There are simply too many outstanding issues as yet for this to conclude in the next two to six weeks.
Is Paramount Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on PARA stock based on two Buys, seven Holds and six Sells assigned in the past three months, as indicated by the graphic below. After a 0.33% loss in its share price over the past year, the average PARA price target of $11.92 per share implies 0.42% downside risk.
