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Paramount’s Sale to Skydance: Court Rules on Investigation into Special Committee

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Paramount Global’s minority shareholders are investigating its sale to Skydance for wrongdoing. And they now get a new piece of the puzzle.

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In Metropolitan Water Reclamation District Retirement Fund, et al., v. Paramount Global, Paramount Global minority shareholders have succeeded on June 5, 2026 in a Section 220 demand to review informal Paramount Global board materials. The issue at hand is controller Shari Redstone’s influence over a special committee due to a conflicted transaction. Redstone, who held over 77% of Paramount Global’s stock through her holding company NAI, reportedly was to receive hundreds of millions of dollars in additional compensation, as well as indemnification from shareholder litigation from acquirer Skydance, who purchased Paramount Global and NAI together, for about $8B. In contrast, Apollo Global Management made an all-cash offer of $26B, which would have far more benefited the minority shareholders. The Paramount board got in front of the issue by forming a special committee and obtaining its own counsel. As the Delaware Chancery court said:

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Turning to the case at hand, the court has observed that “[t]he use of an
independent special committee ‘can serve as powerful evidence of fair dealing’
if the special committee is truly independent and functions effectively.’” In re
Sears Hometown & Outlet Stores, Inc. S’holder Litig., 309 A.3d 474, 535 (Del.
Ch. 2024) (quoting Gesoff v. IIC Indus., Inc., 902 A.2d 1130, 1145 (Del. Ch.
2006)). To be effective, a special committee “must have real bargaining power
that it can exercise with the majority shareholder on an arm[’]s length basis.”
Kahn v. Lynch Commc’ns Sys., 638 A.2d 1110, 1117 (Del. 1994).

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Here, allegedly Redstone molded the special committee board to obtain the result she wanted, steering the transaction to Skydance.  She allegedly pushed out several board members who were not favorable to the transaction that were on the special committee. However, a special committee can only cross the bar for fair dealing if it is truly independent with real bargaining power. That is certainly in question here.

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Jerome Fogel is co-founder of Fogel & Potamianos LLP, a firm recognized by Chambers & Partners’ California Spotlight Guide for excellence in corporate law. A partner in the Corporate Practice Group and Chair of the Sports & Entertainment Group, he is known as an innovator and dealmaker in the legal community. He serves as a general counsel to privately held companies, including representation in mergers and acquisitions. 

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