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Shari Redstone sold out her journalists — has she thrown her shareholders under the bus too? Paramount Global, the media group she chairs, said on Wednesday it would pay US President Donald Trump $16mn to settle claims that its news show 60 Minutes harmed him during the 2024 election by editing an interview of his Democratic opponent Kamala Harris.
Freedom of the press is as American as apple pie. Nonetheless, fighting with Trump could be expensive and punitive. In that sense, Redstone is rational to buy peace. She also has a few balls in the air, most notably a sale of her Paramount stake to Skydance Media that should net her about $2bn. That deal requires approval from the Federal Communications Commission. The regulator says there is no quid pro quo — but it could be reasonable for her not to take the risk.
Placating one foe could fire up another. Washington super-lawyer Abbe Lowell, whose past clients include Hunter Biden and Ivanka Trump, has warned that striking a deal with Trump clashes with multiple duties that Paramount owes to shareholders. He goes as far as to suggest a settlement could amount to “bribery” and result in “waste”, the latter a legal concept whereby a company destroys corporate assets for no benefit to shareholders. Paramount says there is no connection between the settlement and the merger.
Redstone and her fellow shareholders have already locked horns. Some investors have sued Paramount directors and the chair herself over the Skydance deal, arguing that the terms improperly give better terms to Redstone’s class of shares over those held by ordinary shareholders. The latter are getting a lower cash price per share, and a greater share of their proceeds in equity. That suit is still ongoing.
Courts often bestow upon boards wide discretion to use their “business judgment”. Each negotiation in this case was led by independent directors. Moreover, in both decisions, Paramount says the economic choices it made were rational. Settling the Trump lawsuit is cheaper than potentially litigating for years, even if the company eventually prevailed and the Skydance merger was the best deal available, for all stakeholders.
For all the noise, CBS News — the division that makes 60 Minutes — is tiny in the context of the Paramount empire. Its movie and television studios are much bigger money-spinners: the combined Paramount and Skydance is mooted to be valued in aggregate at almost $30bn. Still, news media remains high profile and prestigious. Paramount boasts a legacy of notable muckrakers such as Edward R Murrow and Mike Wallace.
Rights and wrongs aside, most shareholders probably want the same thing: for the Skydance deal to close and the resulting cash to hit their accounts. That doesn’t mean some dissident investors won’t pursue legal action against the board, but the reality is that traditional capitalism isn’t well placed to uphold ideals such as fearless journalism. It will soon be for Skydance to decide whether it wants to prove otherwise.
