Just as Paramount Skydance boss David Ellison was finalizing his US$110.9 billion (AU$156 billion) Warner Bros. Discovery takeover, a US$150 million (AU$211 million) lawsuit has hit his top lieutenant.
And it makes the internal drama at any local network look like a Sunday school picnic.
The explosive lawsuit against Paramount President Jeff Shell doesn’t just accuse him of breaking a US$150 million oral PR contract. It alleges a catastrophic failure of corporate governance, with highly sensitive corporate secrets supposedly leaked to a Las Vegas gambler and self-proclaimed ‘fixer.’
The Las Vegas soundboard
Las Vegas gambler Robert James “R.J.” Cipriani filed the suit in California, claiming he provided “sophisticated, high-value crisis communications services” to Shell for 18 months.
During this time, Shell was navigating the fallout of his inappropriate relationship with a CNBC anchor, which led to his dramatic ousting from NBCUniversal.
According to Cipriani, Shell treated him not just as a PR flack, but as a confidential corporate sounding board. The lawsuit alleges Shell recklessly shared highly sensitive information with the gambler, including confidential details about Paramount’s internal business strategies.
Cipriani claims he advised Shell during high-stakes negotiations over the streaming rights for South Park and was fed inside information regarding a massive US$7.7 billion (AU$10.8 billion) Paramount deal for UFC broadcast rights.
Cipriani claims he advised Shell over the streaming rights for South Park. Image: file
The South Park problem
The alleged leaks concerning South Park are particularly damaging. The hit animation has been the subject of multiple, complex legal battles over whether its massive content library belongs to Paramount+ or rival streamer HBO Max (owned by Warner Bros. Discovery).
The irony that Shell allegedly leaked secrets about South Park to a gambler just before Paramount merged with the very company it was suing over those secrets will not be lost on regulatory authorities in Washington, D.C.
Drowning in debt, drowning in leaks?
This is a disaster for David Ellison. The Paramount Skydance takeover was sold on the promise of bringing stable, steady leadership to the embattled media giant.
Instead, Ellison finds his newly merged entity, already drowning in US$79 billion (AU$111 billion) of inherited WBD debt, and facing accusations that its President was treating a Las Vegas fixer as a confidential soundboard.
Jeff Shell and his legal counsel claim they will strongly respond. Image: Hollywood Reporter
A brief resolution and a total denial
Cipriani claims the US$150 million payment was never intended to be in cash.
Instead, he alleges Shell promised to give Cipriani and his wife co-executive producer credits on a televised production of a Spanish-language music show, Serenata De Las Estrellas. When Shell allegedly reneged on this oral agreement, Cipriani took the dispute to the courts.
High-powered entertainment litigator Patty Glaser, representing Shell, came out swinging in a brief statement to the press: “We were presented with a draft complaint riddled with clear errors of fact and law. We will strongly respond.”
Strong response or not, the timing is a disaster for Paramount.