Paramount Global’s parent company National Amusements and Skydance Media have agreed to merge less than a month after the two sides abruptly split. Negotiations on the agreement have ended.
Paramount, which owns Paramount Pictures, the CBS television network and CBS News, announced in a press release Sunday night that it is combining 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 caps months of speculation about the future of Paramount, which also reportedly attracted a $26 billion bid from a consortium that includes Sony Pictures and private equity firm Apollo Global Management. Several 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 percent of Paramount’s voting stock. Shareholders holding nonvoting shares will receive $15 per share, or one nonvoting share of 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 of the combined company. Paramount Global would then merge with Skydance in an all-stock transaction that would value the latter at $4.75 billion.
The deal also gives other potential bidders for Paramount 45 days to submit competing offers, an apparent effort to appease shareholders who felt Skydance’s initial offer undervalued their stake in the media company. The transaction is subject to regulatory approval.
Bringing Old and New Hollywood Together
The deal brings together Paramount, a historic film studio founded in 1912 and known for such classics as “Titanic,” “The Godfather” and “Raiders of the Lost Ark,” as well as franchises such as “Star Trek” and “Mission Impossible,” with an entertainment industry newcomer. Since David Ellison launched Skydance in 2010, the company has produced or co-produced hit films and television shows, including “Top Gun: Maverick” and the streaming series “Reacher.”
“This is a pivotal and transformative time for our industry and for the storytellers, content creators and financiers 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 entrusting us with the opportunity to lead Paramount. We are committed to energizing the company and strengthening Paramount with contemporary technology, new leadership and creative discipline that is focused on enriching generations to come.”
Ellison will serve as chairman and CEO of Paramount, and Jeff Shell, chairman of RedBird Sports and Media, a subsidiary of investment firm Redbird Capital Partners, will become chairman. Shell is the former CEO of NBCUniversal.
Redstone’s Final Act
For Shari Redstone, National Amusements’ majority shareholder, the deal concludes her family’s long stewardship of Paramount, which built on the foundation laid by her late father, entertainment mogul Sumner Redstone. In recent years, that effort has focused on growing Paramount’s streaming footprint, as well as continuing to expand its core network television, cable and film businesses.
“In 1987, my father, Sumner Redstone, acquired Viacom and began assembling and growing the businesses that are now known as Paramount Global,” Redstone said in a statement. “He had the vision that ‘content is king’ and was always committed to delivering quality content to audiences around the world. That vision has remained at the heart of Paramount’s success, and our accomplishments are a direct result of the incredibly talented, creative and dedicated individuals who work across the company. Given the changes in the industry, we want to strengthen Paramount for the future while ensuring that content remains king.”
The merger with Skydance follows tense negotiations in which Paramount executives sought to balance the interests of investors who hold the company’s voting shares — which are largely controlled by Redstone — with those who hold nonvoting shares. The latter are represented by large institutional investors such as Berkshire Hathaway and Vanguard, according to financial data firm FactSet.
The agreement also follows the Departure on April 29 former Paramount Global CEO Bob Bakish has been replaced by an Office of the CEO led by three division heads: George Cheeks, chairman and CEO of CBS; Chris McCarthy, chairman and CEO of Showtime and MTV Entertainment Studios; and Brian Robbins, chairman and CEO of Paramount Pictures and Nickelodeon.
After the initial agreement to combine National Amusements and Skydance collapsed on June 11Paramount’s new management has unveiled plans to cut $500 million in costs, explore a joint venture or other possible partnerships for Paramount+, and sell non-core assets. It’s unclear how that plan might play out under Skydance’s leadership.
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 same period a year earlier. Privately held Skydance expects its annual revenue to reach $1 billion by 2024, according to the Wall Street Journal.
The sale of Paramount also highlights the ongoing consolidation within the media space, as industry stalwarts like Paramount and CBS seek to compete with much larger rivals, including technology and entertainment companies.