Paramount Global's Governance Crisis: How Redstone Control Threatens Minority Shareholders

The governance structure of Paramount Global (PARA) has long been a point of contention, but recent developments underscore a stark conflict between the Redstone family's concentrated control and the interests of minority shareholders. With Shari Redstone and her family holding 61% of voting power through dual-class shares, decisions—from mergers to legal settlements—risk prioritizing personal interests over broader shareholder value. This article examines how Paramount's governance flaws threaten minority investors and why the stock remains a risky bet.

The Voting Power Imbalance: Minority Shareholders Lack Influence

Paramount's Class A shares, controlled by the Redstone family's National Amusements, carry 10 votes each, while Class B shares (held by most investors) have no voting rights. As of 2025, the Redstones own 77% of Class A shares, translating to 61% of total voting power. This structure effectively silences minority shareholders. For example, a 2024 shareholder proposal on EEO policy risks received <5% support in official tallies, but adjusted calculations (excluding Redstone votes) showed nearly 49% support from non-insiders. The proxy process is a mere formality: the Redstones' votes ensure their agenda dominates.

The data reveals PARA's underperformance, down 40% since 2020, while the S&P 500 rose 15%. Governance issues and strategic missteps, such as the Skydance merger, likely contributed to this divergence.

The Skydance Merger: A Deal Tethered to Legal and Regulatory Uncertainty

The $8 billion merger with Skydance Media hinges on FCC approval, delayed by President Trump's $20 billion lawsuit over edits to a 60 Minutes interview. Paramount's board, led by Redstone, faces a dilemma: settle the lawsuit to expedite FCC clearance or risk missing the October 2025 deadline. Reports suggest an $8 million settlement offer was rejected by Trump, who demanded $20 billion—a figure even his legal team deemed unrealistic.

A settlement, however small, risks legal fallout. Democratic senators have warned that payments to Trump could violate anti-bribery laws, especially since FCC Chairman Brendan Carr—a Trump appointee—oversees both the merger review and the lawsuit. If the FCC approves the merger after a settlement, minority shareholders may challenge it as a breach of fiduciary duty. Redstone stands to gain $2 billion personally from the deal, while minority investors face diluted stakes and potential liability.

Financial and Legal Risks: The Cost of Governance Failures

Paramount's financial health is precarious. A $6 billion write-down on cable networks and $148 million in executive compensation (including $87 million for ousted CEO Bob Bakish) highlight misallocation of resources. The board's D&O insurance excludes bribery-related liabilities, leaving shareholders exposed if regulators pursue legal action over a settlement.

Even if the merger closes, the Redstones' control will diminish: David Ellison (Skydance's CEO) plans to replace Redstone on the board, but his family's 50% stake post-merger ensures voting power shifts. Minority shareholders, however, gain no voting rights in the new entity, perpetuating their marginalization.

Investment Implications: Proceed with Caution

Paramount's governance flaws and legal minefield make it a high-risk investment. Key risks include:
1. Merger Failure: An unresolved lawsuit or FCC rejection could trigger a stock collapse.
2. Litigation Costs: Shareholders may face lawsuits over alleged self-dealing or breach of fiduciary duty.
3. Value Erosion: Minority investors are unlikely to benefit from the merger's promised synergies, given Redstone's outsized stake in the deal.

Recommendation: Avoid PARA until governance reforms dilute the Redstones' voting control or until the Skydance merger's regulatory hurdles are cleared. Short sellers may capitalize on the stock's vulnerability, but even they should monitor FCC developments closely.

Conclusion

Paramount Global's governance structure is a ticking time bomb for minority shareholders. While Shari Redstone and her family navigate high-stakes legal and regulatory battles, the broader investor base remains sidelined—deprived of a meaningful voice and at risk of bearing the costs of missteps. Until power is democratized, PARA's stock will remain a speculative play rather than a prudent investment.

This graphic illustrates how 77% of Class A shares (Redstone-controlled) hold 61% of voting power, while Class B shareholders (93% of total shares) have none.