Mario Gabelli’s legal threat influenced the doomed Paramount merger

A legal threat from investor Mario Gabelli was a “major factor” in this week’s unraveling of Shari Redstone’s $8 billion deal to merge Paramount Global with its “Mission: Impossible” production partner Skydance Media, The Post.

When Redstone made a surprise move to pull the plug on the deal this week — just before a special Paramount committee was poised to vote on it — she was staring down the barrel of a $100 million lawsuit by Gabelli over the deal, according to sources close to the situation.

The 70-year-old media heiress had not been in any recent discussions with Gabelli, who has long been a major Paramount investor, sources close to the situation said.

Mario Gabelli has the most voting shares in Paramount outside of Shari Redstone. Getty Images

However, other Paramount shareholders had ripped off Redstone for seeking a premium for her shares over those of other Paramount investors.

A representative for Redstone did not immediately respond to a request for comment.

In an exclusive interview with The Post, the 81-year-old billionaire — a long-time “Bronx tough guy” famous for his shrewd media investments — declined to discuss any specifics about the potential lawsuit over Paramount.

But he also didn’t deny it could have been on the cards.

“As Teddy Roosevelt said, I speak softly and carry a big stick,” Gabelli said. “We have established a relationship with an attorney and are looking at this whole thing under a microscope.”

Redstone — the daughter of the late media mogul Sumner Redstone — controls Paramount through her 77% stake in National Amusements, a holding company that controls Paramount’s voting stock.

Gabelli, meanwhile, owns more than half of the remaining voting stock — 54% to be exact, according to securities filings.

In addition to Skydance recently lowering its proposed payment to National Amusements to $1.7 billion from more than $2 billion, sources say a sticking point in the talks was whether Skydance would indemnify Redstone against potential lawsuits if it did not require shareholder approval for the deal.

Redstone says she canceled the talks for non-economic reasons. Patrick McMullan via Getty Images

Indeed, sources say Gabelli’s legal team was focused on National Amusements — leaving Redstone himself with the lion’s share of the responsibility.

Redstone’s attorney reportedly emailed Paramount’s special committee Tuesday saying he and Skydance could not agree on the outstanding “non-economic terms.” Insiders say the legal obligations surrounding the shareholder vote were a key issue.

“People see Gabelli as an activist and a plaintiff,” said one Wall Street analyst who covers Paramount shares.

“Shari and the Paramount Special Committee know very well how the vote would have gone had there been an independent vote,” the analyst added.

Skydance wanted to combine its studios with Paramount. Shutterstock / KI Photography

It wouldn’t be the first time Gabelli got his fair share of Redstone in court.

In April of last year, shareholders, including Gabelli, won a $122.5 million settlement over Viacom’s $30 billion merger with CBS — the deal that formed Paramount Global.

Gabelli had admitted that Redstone and a special Viacom committee breached their fiduciary duty after approving the deal without shareholder approval.

Sources say Gabelli believes the Skydance deal was even worse, given the rich premium Redstone was asking for its stake.

Insiders say Redstone feared Gabelli’s wrath despite the fact that the vote and common stock would have been consolidated in a shareholder vote on a Skydance merger, curbing Gabelli’s influence.

Now, Redstone is reportedly exploring a sale of National Amusements to bidders, including Edgar Bronfman Jr., rather than selling all of Paramount.

“One possible theory of what’s going on is if she cuts a deal to sell part of National Amusements, there won’t be any litigation,” Gabelli said.

This is not necessarily a safe bet. According to sources, Bronfman is weighing a plan to separate Paramount Global’s broadcast business from its low-growth cable channels, loading the latter with the company’s debt.

Gabelli says, like Teddy Roosevelt, he “speaks softly and carries a big stick.” Getty Images

Technically, Redstone would not need shareholder approval for a National Amusements sale.

But if a buyer then moves to make changes to Paramount Global, that could trigger shareholder objections to the change-of-control provisions, the sources said.

“If she tries to sell NAI, we have six months to figure out if it’s a change of control while the FCC reviews the deal,” Gabelli said.

In an exclusive interview in April with The Post, Gabelli said he would “rather not see any sale.”

Despite fears about the media giant’s gargantuan debt load, theater woes and cable-TV cord-cutting, Gabelli said he likes its outlook as it cuts costs and grows its Paramount+ streaming service.

Redstone may yet sell its holding company National Amusements. Getty Images

It’s a position he reiterated this week.

Gabelli said he believes the streaming business including Paramount+ will grow in value to $19 billion in 2027 from $13 billion this year.

The movie business, he projects, will also double in value from $830 million to $1.7 billion in three years.

“We are marathon runners and look at Paramount from a long-term ownership position,” Gabelli told The Post.

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