Investors Using Shareholder Power to Challenge Corrupt Paramount Deal

A pair of press organizations are using their power as shareholders of media giant Paramount to demand that its owners David and Larry Ellison produce records related to two recent acquisitions: Skydance’s acquisition of Paramount, and Paramount Skydance’s proposed acquisition of Warner Bros. Discovery. The records could shed light upon whether the executives traded favors with the Trump administration to get approval for the deals.

“We are participating in corporate governance to protect the freedom of the press and protect our investment,” said Seth Stern, chief of advocacy at Freedom of the Press Foundation, which holds shares in Paramount as part of its $21.5 million investment portfolio. The value of Paramount’s shares has dropped sharply from almost $20 a share last September to $10.78 as of Monday afternoon.

“When you’re overpaying dramatically for assets, promising the president of the United States you’re going to damage the product … these are not reasonable business judgements that an independent board could conceivably come to in good faith,” Stern said. “This appears to be just blatant corruption.”

Reporters Without Borders joined Freedom of the Press Foundation on the request. Using Delaware General Corporation Law Section 220, the two investors say in a communication with Paramount that they have the right to inspect the company’s books and records, to determine whether “executives may have breached their fiduciary duties or otherwise committed misconduct.”

Paramount legally must respond to the demand by Thursday. The company did not respond to a request for comment.

PARAMOUNT’S TAKEOVER OF WARNER BROS. DISCOVERY was already facing serious regulatory challenges before this action. California Attorney General Rob Bonta said in a conference call Monday that “there are red flags everywhere” with the deal and that he may file an antitrust lawsuit against it in conjunction with other states. More than 5,000 marquee-name actors and other entertainment industry players have signed an open letter opposing the merger.

Critics have labeled the deals a catastrophe for unbiased journalism and a prelude to massive layoffs. The two shareholder groups are particularly concerned with the ethical compromises made to flatter and even enrich Donald Trump and subsequently get the deals past federal antitrust regulators.

They list the 2025 “side deal” that Skydance CEO David Ellison made with Trump to run between $15 million and $20 million in “public service announcements” if Trump dropped his defamation case against CBS News for a 60 Minutes interview with Kamala Harris that he didn’t like; the $16 million Paramount Global agreed to pay to a foundation for Trump’s future presidential library; the decision to make a Trump-aligned GOP donor the CBS “ombudsman” to eliminate “bias” and pledging to erase all diversity, equity, and inclusion practices; and a promise of “sweeping” changes at CNN, currently owned by Warner Bros. Discovery—including ousting employees Trump does not like—if Paramount acquired the competitor.

In addition, the two groups listed decisions that appear to be bad business, including the purchase of “the Free Press—a Substack blog—for a shocking $150 million,” the appointment of Free Press blogger Bari Weiss as CBS editor in chief, and the subsequent departure of Anderson Cooper, the most recognizable correspondent on 60 Minutes, along with veteran news producers Alicia Hastey, Bill Owens, and Mary Walsh.

Since taking over Paramount, Skydance has also canceled The Late Show with Stephen Colbert, which had been the highest-rated late-night talk show for nine consecutive seasons; acquired the Ultimate Fighting Championship domestic broadcasting rights in a seven-year, $7.7 billion deal; and decided to reboot “the moribund Rush Hour franchise” with a director who has not made a feature film since numerous women in 2017 accused him of rape and sexual assault, after which he moved to Israel, where he is protected from extradition.

At the same time that the Ellisons were making deals that appear corrupt and decisions that appear idiotic, shareholder value was dropping, the two journalism organizations say. The market capitalization of CBS, for example, is down 40 percent and shareholders have lost $8 billion in value. David Ellison is telling shareholders to expect “significantly lower theatrical revenue year-over-year” in 2026. (Revenue, however, is up 2 percent to $7.35 billion, but that does not necessarily translate to gains for shareholders.)

One of the most bizarre examples of the relationship between Trump and the Ellisons was when Trump ordered a criminal investigation into CNN, prompting zero concern by Paramount, Stern said.

“If I were buying a company and the president personally announced an investigation into that company, I would certainly want to find out more about that,” he said. “And if I found out the investigation was frivolous and did not even exist, I would be upset about that and defend the business I’m planning to take over.”

“Just because Donald Trump acts like a clown doesn’t mean you can ignore his antics when they directly impact you,” Stern said, adding that the C-suite as well as Paramount’s independent directors are all on the hook for approving deals that fail to benefit shareholders.

Corporate law gives significant deference to executives and independent board members, and it is difficult to win a lawsuit against them for fiduciary failures. The business judgment rule, for example, is a case-law standard that assumes board members are in the right as long as they made their decision in good faith, with the same care of a reasonable person, and with the reasonable belief that they’re acting in the corporation’s best interests. But all of that is out the window with Paramount, Stern said, and anyway, Delaware law does give shareholders the right to inspect.

Other shareholders have used their position to make similar books and records demands of Paramount, Securities and Exchange Commission filings show, for various issues and with varying success. Some have been directly related to Skydance’s acquisitions, such as the April 2025 demand by certain worker retirement funds in Chicago. As with the press organizations, the funds used Section 220 to investigate possible breaches of fiduciary duties in connection with the Skydance transaction. The company produced some material the funds said was inadequate; a magistrate judge held a trial in March and took the matter under advisement.

As my colleague David Dayen explained, Paramount financed their first $30-per-share bid with about $84 billion in pro forma debt. As of March, that had increased to $31 per share, plus a “ticking fee” of 25 cents per share every three months the deal fails to close after the end of this September, plus a $2.8 billion breakup fee for Netflix. That’s an additional $5.3 billion, and counting.