Paramount Global agreed to pay $122.5 million to settle a three-year-old lawsuit by multiple major investment funds that they believed forced the company to force the 2019 merger of Viacom and CBS at the expense of minority shareholders.
The settlement, disclosed in a Paramount financial filing, marks the resolution of the case filed in the Delaware Chancery Court.
The plaintiffs argued that the company’s controlling shareholder, Shari Redstone, now chairman of Paramount Global, breached her fiduciary duties by staffing Viacom’s board of friends and allies so she could further her merger agenda.
The lawsuit argued that the merger between Viacom and CBS was done to protect the assets of the Redstone family and its investment vehicle, National Amusements Inc., rather than common CBS stockholders. As part of the nearly $12 billion deal, CBS, the top-rated television network, joined forces with the smaller Viacom, which owned brands like MTV, Nickelodeon, Comedy Central and Paramount Pictures.
CBS and Viacom didn’t merge until 2000. But the companies split in 2006 when Sumner Redstone, Shari’s father, feared challenges in CBS’s broadcasting business would slow its share’s growth. CBS proved to be the most successful company in the years that followed.
The Redstone family controlled nearly 80% of the voting shares of Viacom and CBS. The merged company was renamed Paramount Global in 2022.
A Delaware judge must approve the settlement reached earlier this week, the filing said. Multiple cases filed by disgruntled groups of Viacom shareholders were merged into a single case by the court.
CBS and Viacom were collectively worth more than $30 billion before the merger was announced in mid-2019. But like other traditional media companies, Paramount Global saw its stock hit by a correction in the financial market.
After the merger, the company posted poor earnings that were exacerbated by the coronavirus outbreak. On Friday, Paramount Global Class B shares closed at $22.60, down 33% from a year ago.
Source: LA Times