The Desk appreciates the support of readers who purchase products or services through links on our website. Learn more...

Another investment firm criticizes Paramount-Skydance merger talks

Aspen Sky Trust characterized Skydance's offer as "undervalued," one that would benefit Shari Redstone over other shareholders.

Aspen Sky Trust characterized Skydance's offer as "undervalued," one that would benefit Shari Redstone over other shareholders.

The front of the Paramount Pictures studios in Los Angeles, California. (Stock image by Hannah Wernecke via Unsplash)
The front of the Paramount Pictures studios in Los Angeles, California. (Stock image by Hannah Wernecke via Unsplash)

A second investment firm has sent a letter to the board of directors at Paramount Global that criticizes their decision to explore a merger with Skydance Media over other offers.

The letter, sent by a law firm representing Aspen Sky Trust, says the deal with Skydance Media stands to substantially benefit Shari Redstone and her company, National Amusements, over other shareholders that have smaller positions in Paramount.

The note comes amid several recent media reports that revealed Paramount’s board of directors recently decided to entertain Skydance’s offer to merger its studio business with Paramount, while tabling for consideration similar offers made by other firms.

Those other offers include one by Apollo Global Management, which committed around $26 billion in cash to acquire all of Paramount’s media and entertainment businesses. The board expressed concern over Apollo Global’s ability to finance the deal, according to reports.

Earlier this week, Matrix Asset Advisors sent a letter raising issues with the plan, saying the board had a fiduciary duty to shareholders to consider other offers beyond what Skydance had put on the table. On Tuesday, Aspen Sky Trust had its lawyer send a letter of its own reaffirming concerns made by Matrix Asset, including the belief that a transaction with Skydance would substantially benefit Redstone over other shareholders.

Specifically, Aspen Sky Trust shared Matrix Asset’s concern that the Paramount board was willing to engage with Skydance on an exclusive basis for 30 days, which gives it time to figure out financing and other matters concerning a potential merger, without affording the same deference to Apollo Global and other potential suitors.

“Apollo Global presented a bid ranging between $26 and $27 billion dollars and Allen Media Group presented a $30 billion dollar bid including debt, both of which reportedly do not include anywhere near the same reward-risk scenario presented by Skydance Media to the Redstone family and the remaining 90 percent of the Paramount shareholder base,” the letter said.

The note also addressed a reported conversation that took place between executives at Paramount and Warner Bros Discovery (WBD) over a potential merger of certain assets. Both companies discontinued those discussions in February.

DOCUMENT: Read the letter sent by Aspen Sky Trust to the Paramount board [Pro Access]

“If a merger is pursued, Aspen Sky Trust urges the Board of Directors to engage in competitive bidding negotiations and abandon its current path of exclusive discussions with any one company, especially one where a Board member holds a heightened financial interest,” the Aspen Sky Trust letter affirmed.

“Any merger discussions and/or transactions that systematically foregoes competitive bidding in favor of exclusive discussions with a single company — especially where that bidder is offering to promote the financial position of a single shareholder over that of the general base — is averse to the fair market valuation of the company,” the letter continued. “Such a result would, at a minimum, provide cause to investigate the ethical motives underlying the transaction. Assuredly, such a result would expose Paramount to liabilities for investor losses based on breaches of fiduciary duties (among other obligations), potential personal liability exposure of the Board of Directors engaging in this reprehensible behavior and should spark security compliance investigations.”

Aspen Sky Trust holds more than 6.574 million shares of Paramount’s common stock, accounting for more than 1 percent of total shares issued.

Get stories like these in your inbox, plus free breaking news alerts on business and policy matters involving media and tech.

Get stories like these in your inbox, plus free breaking news alerts on business and policy matters involving media and tech.

Photo of author

About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 10 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
Home » News » Industries » Television » Another investment firm criticizes Paramount-Skydance merger talks