Paramount Ordered to Release Skydance Merger Records to Investor Looking Into Corporate Wrongdoing

A judge has granted the Employees’ Retirement System of Rhode Island (ERSI) request to obtain books and records from Paramount Global related to its pending $8 billion merger with Skydance Media.

In May, the pension fund, which owns Paramount stock, asked the Delaware Court of Chancery to order the media giant to turn over documents and communications related to the two parties’ discussions, citing concerns that controlling shareholder Shari Redstone and her holding company National Amusements had “usurped Paramount’s corporate opportunities.” At the time, ERSI said the inspection would investigate for “potential wrongdoing, including whether to seek equitable relief to ensure Shari Redstone and NAI do not profit from their wrongdoing.”

In a filing on Wednesday, Vice Chancellor J. Travis Laster wrote that ERSI has “shown by a preponderance of the evidence that there is a credible basis to infer potential corporate wrongdoing in connection with the sale of NAI” and that it is “entitled to obtain books and records that are both necessary and sufficient to fulfill its purpose.”

“The parties have disputes on that issue, but the magistrate judge should address the scope of production in the first instance,” Laster added. “The parties will submit an implementing order that will return this dispute to the
magistrate judge for further proceedings.”

The decision overturns a magistrate’s previous rejection of ERSI’s request in August. Documents that ERSI have requested include:

• Any actual, potential or proposed sale, merger or other business combination involving National Amusements
• Any actual, potential or proposed sale, merger or other business combination involving Paramount or any of its assets, including Paramount Studios
• The actual or potential formation, composition and mandate of any committee of the Paramount Board to evaluate any actual, potential or proposed sale, merger or other business combination involving NAI, Paramount or any of Paramount’s assets, including Paramount Studios
• The Executive Change in Control Severance Protection Plan
• All emails, text messages or other electronic messages exchanged between or among Redstone or anyone representing her, on the one hand, and any other person, regarding any actual, potential or proposed sale, merger or other business, involving NAI and/or any actual, potential or proposed sale, merger or other business combination involving Paramount or any of its assets, including Paramount Studios
• Copies of all documents produced to other Paramount stockholders in response to any Section 220 demand that relate in any way to the subject matter of this demand

A spokesperson for Paramount declined to comment on Wednesday’s ruling. Representatives for ERSI did not immediately return TheWrap’s request for comment.

In addition to ERSI, Mario Gabelli — the largest class A Paramount shareholder behind Redstone — has filed a books and records requests to look into the finer details of the transaction. 

In a formal complaint filed with the Delaware court earlier this month, Gabelli said Paramount has produced a total of 168 documents since his initial request, consisting of “mainly sanitized board and committee minutes, transaction documents and board questionnaires.” He added that there is “credible basis to believe that NAI, members of the board and possibly senior officers of Paramount may have breached their fiduciary duties to the company as NAI apparently has orchestrated a transaction to benefit itself.”

Other Paramount shareholders who have called out the deal include Scott Baker, who has filed a proposed class-action lawsuit arguing the Skydance deal could cost shareholders $1.65 billion in damages, as well as the California State Teachers’ Retirement System (CalSTRS), which believes the damages could exceed that figure.

Gabelli has also filed a petition with the FCC, asking the agency to pause its required review of the transfer of broadcast licenses in connection with the deal as he investigates “potential fiduciary and/or federal securities violations” against the media giant’s minority shareholders. Other parties that have filed petitions with the FCC include a “nonpartisan public interest law firm” called the Center for American Rights, Hollywood’s Teamsters union, the Latino-owned entertainment company Fuse Media, and LiveVideoAI.Corp.

The Paramount-Skydance deal is on track to close in the first half of 2025.

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