Paramount to pay $122.5 million to settle lawsuit over CBS deal
Paramount Global has agreed to pay $122.5 million to settle a 3-year-old lawsuit brought by several large investment funds that believed the company pushed through the 2019 merger of Viacom and CBS at the expense of minority shareholders.
The settlement, revealed in a financial filing by Paramount, marks the resolution of the suit filed in Delaware Chancery Court.
The plaintiffs argued the company’s controlling shareholder Shari Redstone, now chairman of Paramount Global, breached her fiduciary duties by filling the Viacom board with friends and allies so that she could push through her merger agenda.
The suit contended that the Viacom-CBS merger was enacted to protect the fortunes of the Redstone family and its investment vehicle, National Amusements Inc., rather than rank-and-file CBS shareholders. Under the nearly $12-billion deal, CBS, the top-rated broadcast television network, combined with the smaller Viacom, which owned such brands as MTV, Nickelodeon, Comedy Central and Paramount Pictures.
CBS and Viacom were first merged in 2000. But the companies were separated in 2006 when Sumner Redstone, Shari’s father, feared that the challenges facing CBS’ broadcast business would slow the growth of the stock. CBS turned out to be the more prosperous company in the years that followed.
CBS and Viacom formally completed their merger, temporarily claiming the spot as the biggest media merger until the AOL-Time Warner deal closes.
The Redstone family controlled nearly 80% of the voting stock of both Viacom and CBS. The merged company was renamed Paramount Global in 2022.
A judge in Delaware must approve the settlement that was reached earlier this week, according to the filing. Several suits filed by disgruntled groups of Viacom shareholders were consolidated into a single case by the court.
CBS and Viacom were together worth more than $30 billion before the merger was announced in mid-2019. But, like other traditional media companies, Paramount Global has seen its stock hammered by a financial market correction.
After the merger, the company posted weak earnings, compounded by the coronavirus outbreak. On Friday, the price of Class B shares of Paramount Global stock closed at $22.60 and is down 33% over the past year.
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