Viacom Inc., owner of the CBS television network, must face suits seeking $1.6 billion in damages for shareholders who contend they were shortchanged in Viacom's takeovers of Paramount Communications Inc. and Blockbuster Entertainment Corp., the Delaware Supreme Court ruled.
The court's decision revives suits alleging Viacom executives manipulated the media conglomerate's stock price to drive down the value of securities that Paramount and Blockbuster shareholders received in exchange for their shares in Viacom's buyout of those companies. The suits had been thrown out by a lower court on procedural grounds.
In February 1994, Viacom beat out rival QVC Network Inc. by offering $10 billion for Paramount, which owned a movie studio, publishing house Simon & Schuster, television stations, theme parks and stakes in sports teams. That same year, Viacom acquired 82% of Blockbuster, the No. 1 video rental chain, for $7.7 billion.
Shareholders can press ahead with claims that "Viacom deliberately released false economic data for the purpose of artificially and temporarily inflating the price of its stock," Chief Judge Norman Veasey wrote in a 41-page decision handed down Friday.