Paramount Global has agreed to pay $122.5 million to settle a 2019 lawsuit by Viacom shareholders over the company’s 2019 merger with CBS.
The settlement was disclosed Friday in an SEC filing. In the filing (read it here), the company details the chronology of the case brought in Delaware Chancery Court. After disclosing the settlement amount, it notes the company is pursuing legal action against insurance carriers related to the case, though a specific amount for damages being sought was not mentioned.
“The company is currently engaged in litigation regarding insurance coverage against certain of its insurance carriers in the Superior Court of the State of Delaware,” the filing says. “The company intends to pursue its claims vigorously. Pending recovery of any such insurance proceeds, the company will advance funds for the settlement when they become due.”
The settlement requires the approval of a judge in Delaware Chancery Court.
In the suit, shareholders led by the California Public Employees Retirement Fund (CalPERS) had claimed that Paramount chairman Shari Redstone breached her fiduciary duty by pushing allies to ram through the Viacom-CBS merger at investors’ expense. Her motivation, the suit claimed, was to attain the status of “media magnate” like her father, the late Sumner Redstone.
A Paramount rep declined additional comment beyond the material in the filing, including about the litigation against insurers.
A Delaware Chancery Court judge in December 2020 had rejected the company’s request for the suit to be tossed out. Vice Chancellor Joseph R. Slights III, the judge in the case, said “well pled facts regarding the plaintiff’s past predations” and her “direct involvement in merger negotiations” were enough to let the case proceed.
While boards of directors tend to get the benefit of the doubt in such cases, Sights noted that Delaware court “is more suspicious when the fiduciary who is interested in a transaction is a controlling stockholder.” The judge dismissed the allegations of breach of fiduciary duty against ViacomCBS CEO Bob Bakish (now CEO of Paramount), saying no evidence was presented.
Delaware Chancery Court, which does not use jury trials, is the venue for many corporate cases and shareholder suits given that most companies are officially incorporated there.
Paramount has operated as a unified entity for more than three years now, following the close of the CBS-Viacom merger in December 2019. However, it has not completely put the turbulent 2010s behind it. While Viacom and CBS were both controlled by National Amusements, the media entity built by Sumner Redstone and then run by Shari Redstone, the two companies were operated differently and their respective leaders frequently clashed. The final stages of the tenure of disgraced former CBS CEO Les Moonves laid those tensions bare and resulted in a flurry of litigation.