Mario Gabelli moves to FCC to delay license

Billionaire money manager Mario Gabelli steps up scrutiny of Skydance’s deal to take control Big global.

In a petition to the FCC, Gabelli urged the commission not to transfer control of the broadcast licenses of Shari Redstone’s National Amusements to Skydance until he decides whether to sue for breach of fiduciary duty. He alleged that Paramount failed to properly disclose the process that led to the board’s approval of the merger and the fairness of the deal to investors, who reportedly remain deprived of information about the possibility that “the consideration payable to them is diverted” to National Amusements because of its controlling interest in the company.

“We further note that the transaction is not subject to a vote by minority shareholders and that minority shareholders will only be offered non-voting shares in Paramount following the merger.” the request statedfiled on November 8. “This disenfranchises Class A holders who currently have voting rights and leaves the operation of these important media assets essentially unchecked.”

As part of the merger, Class A shareholders will receive $23 per share, while Class B non-voting shareholders will receive $15 per share. Gabelli, the largest holder of non-voting shares, is seeking information on whether Redstone, which owns both non-voting and non-voting shares, will get more money for its Class B shares than others. In a long-awaited uprising over the treatment of minority investors, Gabelli has filed a lawsuit in July in Delaware Chancery Court for access to Paramount’s books in what could be a precursor to a lawsuit against the deal that some investors believe enriches controlling shareholder Redstone at their expense.

Paramount, through various subsidiaries, holds broadcast licenses for 28 local television stations owned by the CBS Television Network. Skydance and National Amusements have filed for approval to transfer control of those licenses from various trusts controlled by Redstone to companies owned by Larry and David Ellison, who will retain full ownership of the family’s voting interest in Paramount as the deal is closed.

In last week’s filing, Gabelli asked the FCC to delay the approval until he decides whether to sue the board of directors of Paramount, National Amusements and Skydance for breach of fiduciary duty based on claims that the deal violated is with federal law.

“The potential fiduciary and/or federal securities law violations that are the subject of Gabelli Value’s investigation could have far-reaching consequences for the company and its existing minority shareholders,” the filing said.

Gabelli’s legal salvo in July centers on the possibility that National Amusements may pursue a deal with Skydance to maximize the price paid for its controlling stake in Paramount while undermining public shareholders. It pointed to competing bids from Allen Media Group, which reportedly offered $14.3 billion to buy all voting and non-voting Class B shares, and Apollo Global Management, which reportedly twice offered $26 billion to buy Paramount, most recently in a joint bid with Sony. that included taking on the company’s $14.6 billion debt load.

Skydance, meanwhile, proposed a much more complex transaction that maximized National Amusement’s returns, the lawsuit said. There is a “credible basis to suspect” that the independence of the committee of directors formed to evaluate the deal has been “compromised,” Gabelli claimed.