Paramount Receives $167 Million Settlement From CBS Shareholders Against Director Shari Redstone, End Years Of Merger Disputes

Paramount Global said Friday it will seek $167.5 million to settle a lawsuit brought by shareholders of the former CBS Corp. has been filed, subject to court approval. against some of the station’s former officials and directors, including Shari Redstone and Joseph Ianiello. This is called a derivative lawsuit and is filed on behalf of the company whose parent company receives the money.

This is the end of two long shareholder lawsuits by Viacom and CBS shareholders in the Delaware Chancery Court, both related to the 2019 merger of Viacom and CBS. ViacomCBS changed its name to Paramount Global in February 2022.

The Viacom lawsuit was settled last year, with Paramount agreeing to pay shareholders $122 million directly as a settlement. The CBS lawsuit had a slightly different structure and was brought on behalf of the company against Redstone, National Amusements, CBS board members and Ianniello, former CBS president and acting CEO (after Les Moonves’ departure).

The lawsuit, a combination of three class actions, alleges breach of fiduciary duties in connection with the negotiation and approval of the merger agreement. It also alleges waste and unjust enrichment with respect to Ianniello’s damages; The director left the company shortly after the merger was completed with a $125 million pay package. It was alleged that majority shareholder Redstone overloaded Viacom’s board with allies and blocked the deal, against the interests of CBS shareholders.

The defendants tried to dismiss the case, but the judge allowed all but one of the complaints.

Paramount said in an SEC filing today that the parties have agreed to a binding term sheet for the “permanent termination” of the case.

The company declined to comment when asked who would pay the $167 million. However, in such cases the D&O insurance usually covers the severance pay.