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How famed investor Mario Gabelli could derail Paramount’s Skydance merger: ‘We want to see all the details’

The months of negotiations to sell the Paramount media empire have been riddled with an exhausting number of twists and turns – and they’re still not over yet. Just ask Mario Gabelli. The famed investor is one of the media giant’s largest shareholders, with clients mostly in the common stock or “B shares” but also those holding the precious “A shares” or voting stock that Shari owns to make her the company’s de facto owner if and when this thing gets done. And Gabelli – a Bronx-born billionaire who hasn’t shaken off his “tough guy” roots – is not going away quietly, On The Money Has learned. Gerry Cardinale, the veteran media banker who heads RedBird Capital, and Mario Gabelli, one of the largest holders of Paramount common stock. Donna Grace/NY Post “You know that Taylor Swift album, the ‘Tortured Poets Department’? We’re the tortured analyst department,” Gabelli told On the Money. “We look for value and how to get more for our clients. We’ve been in the stock for years…all we want is transparency.” The deal has an interesting clause: A 45-day “go shop” window for someone to come up with a better offer. That was one way to indemnify against shareholders’ suits by showing willingness to accept better bids. More From Charles Gasparino Nevertheless, it could spell trouble for closing the deal. For the common shareholders, their upfront payment was pretty meager. Other than an improved balance sheet (more on that in a minute) shares are up a smidge only as the deal got announced; they are still down close to 30% this year. That’s why I hear SkyDance and RedBird want to meet with the sometimes-cantankerous investment maven and make him a believer that David Ellison, the 41-year-old son of a Silicon Valley billionaire, and the media types at buyout firm RedBird Capital have the chops to turn Paramount around. SkyDance and RedBird want to meet Gabelli and make him believe that David Ellison can turn Paramount around. REUTERS Good luck with that. Gabelli tells me he hasn’t heard directly from the Skydance team except on the day the deal was announced when he was asked to join an analyst call. And he doesn’t much care. He wants to make sure his clients aren’t getting hosed before he gives the deal his blessing. But first, Gabelli says, he’s instructed his team to embark on something he calls “operation fishbowl,” meaning he wants to know everything about the deal, who is making money and how much, and what’s in it for his clients. “This could be a great deal. I like what I see in terms of content but we want to see all the details. Suppose Shari got $35 a share for this thing? I got a million clients in the B shares, some of them own the A shares. Places like Vanguard and BlackRock don’t fight for their clients.” Gerry Cardinale, the veteran media banker who heads RedBird Capital, is the key backer of Skydance, the Hollywood studio that has agreed to merge with Paramount in a deal that’s as mind-bendingly complicated as it is historic. Cardinale is the key backer of Skydance, the Hollywood studio that has agreed to merge with Paramount in a deal that’s as mind-bendingly complicated as it is historic. AP And I am told, he clearly understands the Gabelli threat. My sources say he wanted to call the famed investor during the deal negotiations to explain the value of the Skydance-Paramount hook-up but was cautioned against it for legal reasons as murmurs of shareholder lawsuits swirled. That all changed now, he tells me. While he won’t comment on the Gabelli matter, he did tell me that “This was the hardest deal I’ve ever done in my career.” But he says it’s well worth it because he and Ellison might be setting the corporate template for the future of big media. The media industry is bleeding and needs to find a way to survive; Cardinale knows the new Paramount run by a new generation of media mogul in David Ellison in an era of AI and technological change, could be the test-case for the industry’s future. Cardinale knows the new Paramount run by a new generation of media moguls in David Ellison in an era of AI and technological change, could be the test case for the industry’s future. Shutterstock / CryptoFX That’s the long term strategy. Top of mind in the near term, he tells me, is cost cutting, then figuring out a way to leverage all the assets and relationships like with the NFL between the two companies, and technology to drive viewers to Paramount-Plus. “Paramount, is over 100 years old, one of the world’s most iconic companies. It’s one of the five big studios. It’s a portfolio of phenomenal assets…But it needs to be repositioned for the 21st Century and so we still need to do a lot of work.” Cardinale says there will be close to $2 billion in cuts and some asset sales like BET, but not CBS, though the famed broadcast network will not be immune to the cost cuts, and I am told, the new owners are less protective of the network behind closed doors, refusing to totally rule out a sale sometime in the future.

by Charles Gasparino July 11, 2024, 6:13 pm 1.4k Views

The months of negotiations to sell the Paramount media empire have been riddled with an exhausting number of twists and turns – and they’re still not over yet.

Just ask Mario Gabelli.

The famed investor is one of the media giant’s largest shareholders, with clients mostly in the common stock or “B shares” but also those holding the precious “A shares” or voting stock that Shari owns to make her the company’s de facto owner if and when this thing gets done.

And Gabelli – a Bronx-born billionaire who hasn’t shaken off his “tough guy” roots – is not going away quietly, On The Money Has learned.

“You know that Taylor Swift album, the ‘Tortured Poets Department’? We’re the tortured analyst department,” Gabelli told On the Money. “We look for value and how to get more for our clients. We’ve been in the stock for years…all we want is transparency.”

The deal has an interesting clause: A 45-day “go shop” window for someone to come up with a better offer. That was one way to indemnify against shareholders’ suits by showing willingness to accept better bids.

Nevertheless, it could spell trouble for closing the deal. For the common shareholders, their upfront payment was pretty meager. Other than an improved balance sheet (more on that in a minute) shares are up a smidge only as the deal got announced; they are still down close to 30% this year.

That’s why I hear SkyDance and RedBird want to meet with the sometimes-cantankerous investment maven and make him a believer that David Ellison, the 41-year-old son of a Silicon Valley billionaire, and the media types at buyout firm RedBird Capital have the chops to turn Paramount around.

Good luck with that. Gabelli tells me he hasn’t heard directly from the Skydance team except on the day the deal was announced when he was asked to join an analyst call. And he doesn’t much care. He wants to make sure his clients aren’t getting hosed before he gives the deal his blessing.

But first, Gabelli says, he’s instructed his team to embark on something he calls “operation fishbowl,” meaning he wants to know everything about the deal, who is making money and how much, and what’s in it for his clients.

“This could be a great deal. I like what I see in terms of content but we want to see all the details. Suppose Shari got $35 a share for this thing? I got a million clients in the B shares, some of them own the A shares. Places like Vanguard and BlackRock don’t fight for their clients.”

Gerry Cardinale, the veteran media banker who heads RedBird Capital, is the key backer of Skydance, the Hollywood studio that has agreed to merge with Paramount in a deal that’s as mind-bendingly complicated as it is historic.

And I am told, he clearly understands the Gabelli threat. My sources say he wanted to call the famed investor during the deal negotiations to explain the value of the Skydance-Paramount hook-up but was cautioned against it for legal reasons as murmurs of shareholder lawsuits swirled.

That all changed now, he tells me. While he won’t comment on the Gabelli matter, he did tell me that “This was the hardest deal I’ve ever done in my career.”

But he says it’s well worth it because he and Ellison might be setting the corporate template for the future of big media. The media industry is bleeding and needs to find a way to survive; Cardinale knows the new Paramount run by a new generation of media mogul in David Ellison in an era of AI and technological change, could be the test-case for the industry’s future.

That’s the long term strategy. Top of mind in the near term, he tells me, is cost cutting, then figuring out a way to leverage all the assets and relationships like with the NFL between the two companies, and technology to drive viewers to Paramount-Plus.

“Paramount, is over 100 years old, one of the world’s most iconic companies. It’s one of the five big studios. It’s a portfolio of phenomenal assets…But it needs to be repositioned for the 21st Century and so we still need to do a lot of work.”

Cardinale says there will be close to $2 billion in cuts and some asset sales like BET, but not CBS, though the famed broadcast network will not be immune to the cost cuts, and I am told, the new owners are less protective of the network behind closed doors, refusing to totally rule out a sale sometime in the future.

This post was originally posted by New York Post

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