Paramount Global to Merge with Skydance Media

Paramount Global parent company National Amusements and Skydance Media have agreed to merge, less than a month after the parties abruptly parted ways. ended deal talks.

Paramount, owner of the Paramount Pictures film and television studios, the CBS television network and CBS News, announced in a press release Sunday night that it is merging with Skydance, an entertainment company founded by David Ellison, son of Oracle founder Larry Ellison. Paramount also owns the Paramount+ streaming service, Nickelodeon, BET, MTV, Comedy Central and other media brands.

The deal resolves months of speculation about the future of Paramount, which also reportedly attracted a $26 billion bid from a consortium including Sony Pictures and private equity firm Apollo Global Management. A number of prominent media and entertainment executives have also reportedly expressed interest in a potential deal for Paramount.

Under the two-step deal, Skydance will first pay $2.4 billion for National Amusements, which controls 77% of Paramount’s voting stock. Nonvoting shareholders will receive $15 per share, or one nonvoting share in the new company.

Class A shareholders other than National Amusements would receive $23 per share, or the right to receive 1.5333 nonvoting shares in the merged company. Paramount Global would then merge with Skydance in an all-stock transaction valuing the latter at $4.75 billion.

The deal also gives other potential bidders for Paramount 45 days to submit competing offers, 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.

Uniting Old and New Hollywood

The deal unites Paramount — a storied film studio with roots dating back to 1912 and known for classic films such as “Titanic,” “The Godfather” and “Raiders of the Lost Ark,” as well as franchises like “Star Trek” and “Mission Impossible” — with a relative newcomer to the entertainment industry. Since David Ellison launched Skydance in 2010, the company has produced or co-produced successful films and TV shows, including “Top Gun: Maverick” and the streaming 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 incredibly grateful to Shari Redstone and her family for giving us the opportunity to lead Paramount. We are committed to driving the business forward and strengthening Paramount with contemporary technology, new leadership and a creative discipline focused on enriching future generations.”

Ellison will become 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 marks the end of her family’s long stewardship of Paramount, which was built on a foundation laid by her late father, entertainment mogul Sumner Redstone. In recent years, that effort has focused on growing Paramount’s streaming footprint, along with the continued expansion of its core network TV, cable and film businesses.

“In 1987, my father, Sumner Redstone, acquired Viacom and began building and growing the businesses that are now known 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 incredibly talented, creative and dedicated individuals who work at the company. As the industry changes, we are committed to strengthening Paramount for the future while ensuring that content remains king.”

The merger with Skydance follows a fraught negotiation in which Paramount executives tried to balance the interests of investors who own the company’s voting shares — controlled primarily by Redstone — and investors with non-voting shares, represented by large institutional investors including Berkshire Hathaway and Vanguard, according to financial data firm FactSet.

The deal also follows the Departure April 29 by former Paramount Global CEO Bob Bakish, who was replaced by an Office of the CEO led by three division heads: 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.

Pursuing major cost savings

After the first deal to combine National Amusements and Skydance collapsed on June 11Paramount executives have announced plans to cut costs by $500 million, explore a joint venture or other possible partnerships for Paramount+ and sell non-core assets. It’s unclear how that blueprint might change under Skydance’s watch.

Shell said in a call with Wall Street analysts on Monday about Paramount’s future that RedBird and Skydance have identified about $2 billion in potential cost savings.

In the 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 same period last year. Skydance, which is privately held, expects annual revenue to hit $1 billion by 2024, The Wall Street Journal reported.

The Paramount sale also underscores the ongoing consolidation within the media sector, as major players in the industry, such as Paramount and CBS, compete with much larger players, including technology and entertainment companies.

“We believe the new company presents significant opportunities for content production and distribution, but the challenges of competing in today’s disruptive film and entertainment industry remain,” Kenneth Leon, an analyst at CFRA Research, said in a report.

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