A historic movie studio and broadcast network are poised for a generational shift that could radically reshape the entertainment industry.
Shari Redstone and her family agreed Tuesday to tech founder David Ellison’s proposed $2.4 billion buyout of their investment firm, National Amusements Inc., commonly known as NAI, which owns majority shares of troubled media company Paramount Global.
The Redstone family has submitted the offer from Ellison-owned Skydance Media to the special committee of Paramount’s board of directors, which must now accept or reject it. The struggling media giant owns CBS, the Paramount Pictures movie studio and the cable channels MTV, Nickelodeon and Comedy Central.
On Wednesday, Paramount’s board members began weighing the offer, a version of which they were close to approving three weeks ago before Redstone balked and called off negotiations. The question now facing the company is: Is the deal real this time, and what happens when it’s done?
“This feels a lot like Groundhog Day,” analyst Jamie Lumley of research firm Third Bridge said in an emailed statement. “The renewed hope that the two sides will reach an agreement is tempered by concerns that we’ve been here before and it’s not clear that all the outstanding issues have been resolved.”
The prize now finally appears within reach for Ellison, the 41-year-old son of billionaire Oracle Corp. co-founder Larry Ellison. The breakthrough came this week after months of intense drama, including tumultuous backroom negotiations, boardroom conflicts and two dramatic reversals by Redstone.
On June 11, Redstone abruptly terminated the deal with Ellison, just as it appeared close to completion. Her change of stance surprised industry observers—and Paramount insiders—because she had been the most vocal advocate for Ellison’s offer, even pushing aside critics of the deal who opposed it, including the ouster of former Paramount CEO Bob Bakish.
After Redstone walked away from the negotiations, Ellison and his 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 add additional perks — including an additional $50 million earmarked for the Redstones’ NAI — to try to restore trust and get negotiations back on track, according to three people familiar with the process.
In total, the Skydance-Paramount deal is valued at approximately $8.4 billion.
The sale of National Amusements would net the Redstone family $1.75 billion, once the company’s debts are paid. In addition, Skydance and its financial partners have agreed to inject $1.5 billion in cash to help Paramount pay down some of its debt to improve its balance sheet. Those payments would be made after the deal closes, people familiar with the matter said.
The deal would also provide $4.5 billion to buy shares owned by Paramount’s Class B, or non-voting, investors who might be willing to exit.
Wall Street welcomed the new rebound on Wednesday, sending Paramount shares up nearly 7 percent to $11.46.
As part of the transaction, Ellison intends to merge Skydance, a privately held 14-year-old Santa Monica film, television and video game company behind the Paramount blockbuster “Top Gun: Maverick,” with Paramount.
The next step would be for Paramount’s board to approve the deal. The deal would also require consent from federal regulators. That process would take months.
Momentum has built in recent days as both sides seek to strike a deal before next week’s annual media moguls conference in Sun Valley, Idaho, which draws heavyweights including Walt Disney Co. Chief Executive Bob Iger, Amazon CEO Andy Jassy and founder Jeff Bezos, news baron Rupert Murdoch — and Redstone.
Skydance Group also agreed to strengthen provisions to protect the Redstone family from shareholder lawsuits related to the deal, people familiar with the matter said. Some nonvoting shareholders have long opposed Ellison’s proposal, saying it favored the Redstone family at the expense of ordinary investors.
The wrangling over compensation proposals proved tense in the days before the deal collapsed in early June.
At one point, Redstone sought to allow common shareholders to cast a nonbinding vote. But that option was not pursued by Skydance and RedBird. Ultimately, the two sides agreed to a 45-day “go shop” period, allowing Paramount to make other offers.
It’s unclear whether other players are interested in buying Paramount, largely because of the dire straits facing the cable programming industry. The company’s once industry-leading cable channels have seen their audiences flee to streaming and a host of on-demand offerings, including Netflix and Hulu.
Apollo Global Management and Sony Pictures Entertainment had expressed interest in parts of Paramount. Sony wanted to acquire Paramount Pictures and its rich library, which includes the “Mission Impossible” and “Top Gun” franchises. Warner Bros. Discovery was interested, in large part, in buying CBS to bolster its television portfolio, including TNT and CNN.
But even under Ellison’s leadership, the company may have to consider shedding some assets, analysts said. Paramount, for example, has reportedly restarted the process of potentially selling BET.
“I think we can expect the company’s balance sheet to stabilize,” said Laurent Yoon, a senior analyst at Bernstein. “If you can stabilize the balance sheet, it helps them invest in growth. But even if they invest in growth, they’re not going to see the benefits in the short term. It’s going to take time.”
Other potential buyers for National Amusements have emerged in recent months, complicating Redstone’s decision.
She has run the family empire since her father, Sumner Redstone, began facing health problems eight years ago. He died in 2020.
The other suitors — former Seagram and Warner Music executive Edgar Bronfman Jr. and Hollywood producer Steven Paul (“Ghost in the Shell,” “Baby Geniuses”) — had separately offered to pay the family more than $1.75 billion.
The challenges of the rapidly changing industry have pushed Redstone to part with her prized family heirloom. The decision to part with that prized heirloom was a difficult one, according to people close to the mogul. Her family has long been a proud owner of Paramount, formerly known as Viacom.
Redstone’s adult children, who stand to inherit the family fortune, had initially advocated for the Skydance deal, according to two people familiar with the matter who were not authorized to speak publicly.
In addition to the family’s Paramount holdings, National Amusements includes a regional movie theater chain founded by Sumner Redstone’s father, Mickey, a former linoleum flooring salesman, during the Great Depression.
Times reporter Samantha Masunaga contributed to this report.