Background
This Section 220 books-and-records case is the third of three stockholder inspection actions arising from Skydance Media LLC’s acquisition of Paramount Global, which was announced July 7, 2024 and closed August 7, 2025. Paramount was controlled by Shari E. Redstone through National Amusements, Inc. (NAI), which held 77.4% of Paramount’s voting Class A stock. In 2022, NAI caused Paramount to amend its certificate of incorporation to require NAI’s consent for any sale of Paramount’s filmed-entertainment assets, effectively giving Redstone a unilateral veto over any transaction.
Paramount formed an eight-member Special Committee in January 2024 to evaluate potential transactions, including competing bids from Apollo Global Management (which offered up to $27 billion for all of Paramount) and Skydance. NAI blocked the Special Committee from pursuing a standalone sale of Paramount Pictures, declaring any Apollo proposal “unactionable.” In early April 2024—shortly after NAI vetoed Apollo’s bid and the Special Committee entered an exclusivity agreement with Skydance—three Special Committee members (Seligman, Ostroff, and Terrell) resigned or declined re-election. The Wall Street Journal reported at the time that at least one departing director had expressed concerns about the Skydance deal.
Plaintiffs, beneficial owners of Paramount Class B common stock, served inspection demands under Section 220 seeking to investigate whether Redstone improperly influenced the Special Committee to favor a sale that preserved NAI’s value over a transaction delivering greater value to public stockholders. After Paramount produced formal board materials but refused to provide informal board materials or officer-level communications concerning the three director departures, the parties reached an impasse and the dispute proceeded to a paper-record trial before Master Wright.
The Court’s Holding
The Master issued three principal findings. First, consistent with the court’s decisions in the two prior Paramount books-and-records cases, plaintiffs demonstrated a credible basis to suspect potential wrongdoing—specifically, that Redstone may have exercised improper influence over the Special Committee’s negotiation process in order to protect NAI’s interests at the expense of public stockholders. Second, informal board materials concerning the director departures are necessary and essential to plaintiffs’ investigatory purpose because the formal board materials paint an inaccurate or incomplete picture of why Seligman, Ostroff, and Terrell left the Special Committee and of Redstone’s role in those departures. Third, plaintiffs failed to meet their burden to show that officer-level materials regarding the departures are necessary and essential to that same purpose.
The Master also resolved an evidentiary dispute, holding that a post-demand New York Times article examining Redstone’s motivations in the merger process was admissible under the “exceptional circumstances” exception articulated by the Delaware Supreme Court in Paramount Global v. State of Rhode Island Office of the General Treasurer (Rhode Island II, 2026 WL 820647 (Del. Mar. 25, 2026)), because the article was material to the credible-basis inquiry and not unduly prejudicial to Paramount. The Master recommended that the court enter judgment in plaintiffs’ favor on the informal board materials request and in Paramount’s favor on the officer-level materials request.
Key Takeaways
- A credible basis to investigate controller misconduct is established where the record shows a controlling stockholder blocked competing bids through a charter veto and three Special Committee members departed at a critical juncture in negotiations.
- Formal board minutes do not automatically satisfy a Section 220 demand: where formal materials misrepresent or omit material facts about a key event, informal board-level communications (emails, texts) become necessary and essential under Thomas & Betts.
- Officer-level materials remain a higher bar; plaintiffs must affirmatively show they are necessary and essential beyond what informal board materials can provide.
- Under Rhode Island II, post-demand evidence—including news articles—may be considered in Section 220 proceedings in exceptional circumstances when material to the credible-basis inquiry and not prejudicial to the company.
- NAI’s 2022 charter amendment codifying a veto right over asset sales was central to establishing Redstone’s structural ability to distort the sale process.
Why It Matters
This decision reinforces that Delaware courts will look past polished board minutes when there is reason to believe formal records are incomplete or misleading about material events—here, the unexplained departure of three Special Committee members at the precise moment a controller blocked a rival bid. For practitioners, it signals that corporations defending Section 220 demands cannot rely solely on comprehensive formal documentation if the accuracy of that documentation is credibly disputed.
More broadly, the case continues the Court of Chancery’s sustained scrutiny of the Skydance-Paramount deal and Redstone’s role in steering it. The three parallel books-and-records actions, together with the three plenary fiduciary-duty suits, suggest significant litigation exposure for transactions where a controller’s structural veto power may have been used to redirect a sale process away from value-maximizing alternatives for public stockholders.