Paramount-Skydance Damages Far Exceed $1.6 Billion, Funds Say

Paramount Global investors are likely getting shortchanged in its merger with Skydance Media LLC by well more than the $1.65 billion sought in the first lawsuit over the transaction, according to a group of pension funds.

Funds led by the California State Teachers’ Retirement System asked a judge Friday to take a wait-and-see approach toward a brewing battle among shareholder attorneys over the chance to lead the potentially lucrative litigation challenging the $8 billion deal, which will combine Shari Redstone’s media empire and David Ellison’s. The merger includes a $6 billion investment from Ellison’s father, Oracle Corp. founder Larry Ellison, the world’s fourth-richest man.

The first investor to sue over the transaction did only a cursory calculation that ignored the “significantly higher value” implied by other bids “and, thus, much greater potential damages,” the CalSTRS group said in a court filing. They cited a $26 billion all-cash offer from Sony and Apollo Global Management Inc. “A high-quality complaint would not simply take defendants’ word for the fair value of those shares,” according to the funds.

Their filing in Delaware’s Chancery Court came two days after the investor who won the race to the courthouse, Scott Baker, moved to lead litigation that could be worth hundreds of millions to shareholder attorneys. Baker said in his preemptive strike that separate preliminary investigations by CalSTRS and Rhode Island’s public pension fund—which are considering bringing competing cases—would only drag out the process.

Baker’s lawsuit, filed in July, called Redstone a “relentless controlling stockholder” who’s forcing through an unfair deal to bail out her own “floundering” investment after strong-arming the reunification of CBS Corp. and Viacom by stacking both boards with loyalists. The CBS-Viacom deal, which created Paramount, led to protracted litigation in the same court.

Rhode Island technically brought the first case over the Skydance deal, a lawsuit seeking internal files from Paramount under a law giving investors broad access to corporate documents if they have credible but tentative suspicions of self-dealing. But a magistrate rejected the records demand in early August—a decision that’s set to be reviewed by a more senior judge in November.

The CalSTRS group is represented by Bernstein Litowitz Berger & Grossmann LLP, Robbins Geller Rudman & Dowd LLP, Berman Tabacco, and Equity Litigation Group LLP. Baker is represented by Berger Montague PC. Rhode Island is represented by Prickett, Jones & Elliott PA and Kessler Topaz Meltzer & Check LLP.

Redstone is represented by Abrams & Bayliss LLP and Ropes & Gray LLP. Ellison is represented by Ross Aronstam & Moritz LLP. Other Paramount board members are represented by Richards, Layton & Finger PA and Cravath, Swaine & Moore LLP.

The case is Baker v. Redstone, Del. Ch., No. 2024-0790, motion filed 10/18/24.