Paramount Communications Inc. v. Time Inc.

Board defensive action, long-term corporate strategy, and the boundary of Revlon duties.

Time agreed to combine with Warner. After Paramount made an all-cash tender offer for Time, Time restructured the Warner transaction to proceed as a tender offer, making the Paramount bid more difficult to complete.

The Delaware Supreme Court refused to enjoin Time's transaction and held that Revlon duties had not been triggered.

The court reasoned that Time's board had not abandoned its long-term strategic plan or initiated an inevitable sale of control. Under enhanced scrutiny, the board could consider threats to corporate policy and effectiveness, including the risk that shareholders would accept a premium bid that displaced the board's strategic judgment.

1. Which corporate actor gains authority or bears monitoring responsibility under the rule?
2. How does the rule affect agency costs without unduly impairing informed business judgment?