Mario Gabelli legal threat affected doomed Paramount merger

Edgar Bronfman Jr.'s plan to split Paramount Global's streaming business from its cable channels could have several potential effects on the company2.

Firstly, the separation could allow each business to focus on its respective strengths and growth opportunities. The streaming business, including Paramount+, could invest more resources into content production, marketing, and technology to compete more effectively with other streaming platforms. On the other hand, the cable channels business could focus on maintaining its existing customer base and exploring new revenue streams.

Secondly, by saddling the cable channels business with the company's debt, Bronfman's plan could potentially improve the financial health of the streaming business2. This could make the streaming business more attractive to investors and potentially increase its valuation.

However, there are also potential risks involved in this plan. The cable channels business may struggle under the weight of the debt, potentially affecting its ability to operate and maintain its competitiveness. Additionally, the separation could lead to operational inefficiencies and increased costs as the two businesses would need to function independently.

Lastly, the split could trigger shareholder objections over change of control provisions, as mentioned in the web search context. If a buyer, such as Bronfman, were to make significant changes at Paramount Global after acquiring National Amusements, it could lead to shareholder disputes and potential legal challenges.

Mario Gabelli's legal threat was a significant factor in Shari Redstone's decision to withdraw from the $8 billion merger deal with Skydance Media. As a key Paramount investor, Gabelli had raised concerns over the deal, arguing that Redstone was seeking a premium for her stock over other Paramount investors. Redstone controls Paramount through her 77% stake in National Amusements, while Gabelli owns more than half of the remaining voting shares.

Gabelli's legal team was reportedly focusing on National Amusements, which would have left Redstone with a significant amount of liability. This legal pressure, along with the potential for further litigation, led Redstone to pull out of the deal. It should be noted that Gabelli and other shareholders had previously won a $122.5 million settlement in a lawsuit over Viacom's $30 billion merger with CBS, which formed Paramount Global, and Gabelli believed the Skydance deal was even more unfavorable to shareholders.

The potential for legal action and the influence of key investors like Gabelli ultimately played a crucial role in Redstone's decision to abandon the merger with Skydance Media.