In a stunning turnaround, David Ellison’s Skydance Media and Paramount Global controlling shareholder Shari Redstone have returned to the M&A altar.
The companies have reached terms on a revised merger agreement for Redstone’s National Amusements Inc. just three weeks after Redstone abruptly pulled out of a planned reunion, multiple people familiar with the talks told Deadline. NAI controls almost 80% of the voting shares in Paramount.
A special committee of Paramount’s board of directors, which was formed to evaluate strategic options for the troubled media company, is currently considering updated terms of the deal, according to sources. of Wall Street Journal earlier on Tuesday reported on the revived discussions.
Representatives from Paramount, Skydance and NAI declined to comment.
The proposal currently being considered would have Skydance pay $1.75 billion to NAI. That’s less than what the parties had previously agreed to for the first step in a two-step transaction that brings NAI under Skydance ahead of a full merger with Paramount. A requirement for a “minority majority” vote, seen by Ellison as a non-starter in previous rounds of talks, has been dropped in the current proposal.
of WSJ reported that Skydance and National Amusements have also agreed to a 45-day “go-shop period” during which other interested Paramount bidders can make offers. Skydance has been pursuing a deal for more than six months. In recent weeks, investment groups led by Edgar Bronfman, Barry Diller and producer Steven Paul have emerged as interested parties, while private equity giant Apollo, Sony Pictures and Byron Allen have also been linked with offers.
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The reconciliation between Paramount and Skydance only adds to what has become one of the messiest and messiest M&A processes in recent Hollywood history. Paramount, which was formed by the merger of CBS and Viacom in late 2019, has struggled mightily amid the decline of linear TV and the relentless rush to streaming, not to mention the unfavorable operating environment created by Covid and the 2023 shocks. With a stock price nearly a third of its level at the time the merger closed and $14.6 billion in long-term debt due at the end of 2023, Paramount has developed a growing need for a transaction.
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After Redstone backed out of the previous Skydance deal at the last possible moment, her and Paramount’s attention at large shifted to the company’s updated strategic plan. A three-member CEO office, made up of internal executives promoted to the role after the ouster of Bob Bakish last April, presented their plans at the company’s annual shareholder meeting last month. An employee town hall last week also included further messages from the co-CEOs — George Cheeks, Brian Robbins and Chris McCarthy — who have pledged to achieve $500 million in annual cost savings as well as sell select assets and improve margins. of transmission over a shared link. venture or partnership. A new round of layoffs is also expected to begin later this summer, and key senior executives, including the heads of Legal and Home Entertainment, have also left the company.
While the Skydance news has brought yet another shock to an already shaken workforce, the interesting reality is that Paramount has been doing quite well in its film, TV and broadcast efforts in recent weeks, despite the hype. Last weekend, Paramount Pictures opened A Quiet Place: Day One to nearly $100 million worldwide, the best start for any installment in the franchise. Comedy Central’s The daily show saw its highest-rated broadcast of the year with 18- to 34-year-olds after the first presidential debate through a live episode hosted by Jon Stewart. Showtime Studios has made some major talent deals, with Jeffrey Wright, Michael Fassbender, Patrick Dempsey and Richard Gere recently joining the fold. CBS News continued to invest in its national broadcast service, launching CBS News 24/7 on June 24. The new flagship daily series presents the biggest stories of the day in a way that is intended to be both direct and comprehensive, the news division says.
Whether the momentum lasts is anyone’s guess. The prospect of M&A, rather than a strategic turnaround, has buoyed the outlook of some Wall Street analysts, but there is plenty of bearish sentiment weighing on the stock. In a note to clients on Tuesday morning, before news of Skydance’s restarted talks or reviving negotiations for a possible sale of BET Media emerged, Loop Capital analyst Alan Gould described it as dragging out the inevitable. He has a “sell” rating on Paramount, with a 12-month price target of $8.
“The longer it takes for a deal, the less the assets will be worth,” he wrote. “There will undoubtedly be more paramount scuttlebutt at the upcoming Sun Valley conference.”