Paramount Global National Amusements and Skydance Media have agreed to merge less than a month after the parties suddenly agreement talks ended.
Paramount, owner of film and television studios Paramount Pictures, the CBS television network and CBS News, announced in a press release late Sunday that it is combining with Skydance, an entertainment business founded by David Ellison, son of Oracle founder Larry Ellison. Paramount also owns the streaming service Paramount+, Nickelodeon, BET, MTV, Comedy Central and other media brands.
The deal resolves months of speculation about the future of Paramount, which also reportedly withdrew a $26 billion bid from a consortium that includes Sony Pictures and private equity firm Apollo Global Management. A number of prominent media and entertainment industry executives were also said to have expressed interest in a potential deal for Paramount.
Under the two-step deal, Skydance will initially pay $2.4 billion to National Amusements, which controls 77% of Paramount’s voting stock. Non-voting stockholders will receive $15 per share, or one share of non-voting stock in the new company.
Class A shareholders, other than National Amusements, will receive $23 per share, or the right to receive 1.5333 non-voting shares in the combined company. Paramount Global would then merge with Skydance in a stock transaction that values the latter at $4.75 billion.
The deal also gives other potential bidders for Paramount 45 days to submit a competing offer, an apparent attempt to appease shareholders who felt Skydance’s initial bid undervalued their stake in the media company. The transaction is subject to regulatory approval.
The fusion of old and new Hollywood
The deal brings together Paramount — a storied film studio dating back to 1912, known for movie classics like “Titanic,” “The Godfather” and “Raiders of the Lost Ark,” as well as franchises including “Star Trek” and “Mission”. Impossible” — with a newcomer to the entertainment industry. Since David Ellison launched Skydance in 2010, the company has produced or co-produced blockbuster movies and TV shows, including “Top Gun: Maverick” and the broadcast series “Reacher” .
“This is a defining and transformative time for our industry and the storytellers, content creators and financial stakeholders who are invested in Paramount’s legacy and the longevity of the entertainment economy,” Ellison said in a statement. “I am extremely grateful to Shari Redstone and her family for agreeing to entrust us with the opportunity to lead Paramount. We are committed to activating the business and strengthening Paramount with contemporary technology, new leadership and a creative discipline that aims to enrich the generations to come.”
Ellison will serve as chairman and CEO of Paramount, and Jeff Shell, chairman of RedBird Sports and Media, a unit of investment firm Redbird Capital Partners, will become president. Shell is the former CEO of NBCUniversal.
Redstone’s last act
For Shari Redstone, the controlling shareholder in National Amusements, the deal caps her family’s long stewardship of Paramount, which was built on the foundation laid by her late father, entertainment magnate Sumner Redstone. In recent years, that effort has focused on growing Paramount’s broadcast footprint, along with the continued expansion of its core TV network, cable and movie businesses.
“In 1987, my father, Sumner Redstone, bought Viacom and began to assemble and grow the businesses known today as Paramount Global,” Redstone said in a statement. “He had a vision that ‘content was king’ and was always committed to delivering great content to all audiences around the world. That vision has remained at the core of Paramount’s success, and our achievements are a direct result of the talent , creative and incredibly talented individuals working at the company, given the changes in the industry, we want to strengthen Paramount for the future, ensuring that content remains king.
The merger with Skydance follows what has been a fraught negotiation in which Paramount executives have sought to balance the interests of investors who own the company’s voting stock — which is largely controlled by Redstone — and nonvoting investors. The latter are represented by large institutional investors such as Berkshire Hathaway and Vanguard, according to financial data firm FactSet.
The deal also follows Departure on April 29 former Paramount Global CEO Bob Bakish, who was replaced by an Office of the CEO led by three division chiefs: George Cheeks, president and CEO of CBS; Chris McCarthy, president and CEO of Showtime and MTV Entertainment Studios; and Brian Robbins, president and CEO of Paramount Pictures and Nickelodeon.
After the initial deal to combine National Amusements and Skydance collapsed on June 11, Paramount’s new leadership revealed plans to cut costs by $500 million, explore a joint venture or other possible partnerships for Paramount+, and sell non-core assets. It’s uncertain how that plan might change under Skydance’s watch.
In its most recent quarter, Paramount reported an operating loss of $417 million on revenue of $7.6 billion, compared with a loss of $1.2 billion on revenue of $7.2 billion in the year-ago period. Skydance, which is privately held, expects its annual revenue to reach $1 billion in 2024, according to The Wall Street Journal.
The sale of Paramount also highlights the ongoing consolidation within the media space, as industry powerhouses like Paramount and CBS look to compete with much larger competitors, including technology and entertainment companies.