A major movie studio and broadcast network are poised for a generational changing of the guard that could dramatically reshape the entertainment business.
Shari Redstone and her family on Tuesday accepted tech scion David Ellison’s proposed $2.4 billion purchase of their investment firm, National Amusements Inc., commonly known as NAI, which owns a controlling stake in the beleaguered media company Paramount Global.
The Redstone family presented the offer from Ellison’s Skydance Media to a special committee of Paramount’s board, which must now accept or reject it. The struggling media giant owns CBS, movie studio Paramount Pictures and cable channels MTV, Nickelodeon and Comedy Central.
On Wednesday, Paramount board members began evaluating the offer, a version of which they came close to approving three weeks ago before Redstone cooled and called off talks. Now the question rests on the company: Is it the real deal this time, and what happens after it closes?
“It feels a lot like Groundhog Day,” analyst Jamie Lumley of research firm Third Bridge said in an emailed statement. “Renewed hope that the two sides will be able to reach an agreement on the line is tempered by concerns that we have been here before and it is unclear whether all outstanding issues have been addressed.”
The prize now finally feels within reach for Ellison, the 41-year-old son of billionaire Larry Ellison, co-founder of Oracle Corp. The revelation came this week after months of intense drama, including tumultuous behind-the-scenes negotiations, boardroom conflict and two spectacular U-turns from Redstone.
Redstone abruptly pulled the plug on Ellison’s deal on June 11, just as the deal appeared to be on the brink of completion. Her shifty stance surprised industry watchers — and Paramount insiders — because she had been the biggest champion of Ellison’s bid, even bypassing opponents of the deal who had stood in the way, including ousting the former chief executive. of Paramount, Bob Bakish.
After Redstone abandoned the talks, Ellison and his bidding partners spent about a week regrouping. Ellison then contacted Redstone to try again, according to two people familiar with the matter who were not authorized to discuss the internal process.
Ellison and his backers RedBird Capital Partners, private equity firm KKR and Larry Ellison had agreed to inject more sweeteners — including another $50 million earmarked for the Redstones’ NAI — in an effort to restore confidence and put deal talks back on track, according to three people familiar with the process.
Overall, the Skydance-Paramount deal is valued at about $8.4 billion.
The sale of National Amusements would earn the Redstone family $1.75 billion, after the firm’s debts are paid. In addition, Skydance and its financial partners have agreed to provide a $1.5 billion cash infusion to help Paramount pay down some of its debt to improve its balance sheet. Those payments will be made after the deal closes, people familiar with the matter said.
The deal would also set aside $4.5 billion to buy back shares belonging to Paramount’s Class B, or non-voting, investors who may be eager to get out.
Wall Street cheered the new turnaround on Wednesday, sending Paramount shares up nearly 7% to $11.46.
As part of the transaction, David Ellison intends to merge privately held Skydance — the 14-year-old Santa Monica film, television and games firm behind Paramount’s blockbuster “Top Gun: Maverick” — with Paramount.
The next step is for Paramount’s board to approve the deal. The deal would also require the consent of federal regulators. This process would take months.
Momentum grew in recent days as both sides sought to reach a deal ahead of next week’s annual conference in Sun Valley, Idaho, which draws such players as the chief executive of Walt Disney Co. Bob Iger, Amazon CEO Andy Jassy and founder Jeff Bezos. news baron Rupert Murdoch – and Redstone.
Skydance Group also agreed to strengthen provisions to try to protect the Redstone family from shareholder lawsuits over the deal, people with knowledge of the matter said. Some non-voting shareholders have long opposed Ellison’s proposal, saying it benefited the Redstone family at the expense of everyday investors.
Disputes over the reparations proposals proved fraught in the days before the deal collapsed in early June.
At one point, Redstone asked for the ability to allow regular shareholders to have a say in a non-binding vote. But that wasn’t a start for Skydance and RedBird. In the end, the two sides agreed to a 45-day “go shop” period, allowing Paramount to make other offers.
It is not clear whether there are others interested in buying Paramount as a whole, largely because of the severe challenges facing the cable programming business. The company’s cable channels, once industry leaders, have seen their audiences flee in the shift to streaming and abundant on-demand offerings, including from Netflix and Hulu.
Apollo Global Management and Sony Pictures Entertainment had expressed interest in parts of Paramount. Sony wanted the Paramount Pictures studio and its rich library, which includes the “Mission: Impossible” and “Top Gun” franchises. Warner Bros. Discovery was interested, in large part, in acquiring CBS in an effort to strengthen its television portfolio, including TNT and CNN.
But even under Ellison, the company may need to consider shedding certain assets, analysts said. Paramount is said to have restarted the process of potentially selling BET, for example.
“I think what we can expect is a stabilization of its balance sheet,” said Laurent Yoon, senior analyst at Bernstein. “If you’re able to stabilize the balance sheet, it helps them invest in growth. But even if they invest in growth, they won’t see the fruits of it in the near term. It will take time.”
Other potential buyers of National Amusements emerged in recent months, complicating Redstone’s decision.
She has overseen the family empire since her father, Sumner Redstone, began dealing with health issues eight years ago. He died in 2020.
The other suitors — former Seagram and Warner Music chief executive Edgar Bronfman Jr. and Hollywood producer Steven Paul (“Ghost in the Shell,” “Baby Geniuses”) — had separately proposed to pay the family more than $1.75 billion.
The challenges of a rapidly changing industry in many ways led Redstone to part with its beloved family legacy. The decision to leave was a difficult one, according to people close to the tycoon. Her family has long been proud of its ownership of Paramount, formerly known as Viacom.
Redstone’s grown children — who are in line to inherit the family fortune — had initially defended the Skydance deal, according to two people familiar with the matter but not authorized to speak publicly.
In addition to the Paramount family stake, National Amusements includes a chain of regional movie theaters founded by Sumner Redstone’s father, Mickey, a former linoleum floor salesman, during the Great Depression.
Times staff writer Samantha Masunaga contributed to this report.