Perhaps the biggest sign that mainstream media is moving toward ICU isn’t that after months of intense negotiations, Shari Redstone did something weird and refused to sell her flagging empire to a company known as Skydance.
No, it’s that many smart people in the media, including those involved in the negotiations, believe that when Shari is confronted with the cold, hard facts about the company she inherited from Pops, the late media mogul Sumner Redstone , she will probably be back. at the negotiating table.
She simply has nowhere to go.
I know what you’re saying: Aren’t there other bidders for his “controlling interest” in Paramount?
Sorry, if you know the stuff, it’s not exactly an impressive group.
Less impressive: Paramount is run by three executives who all report to Redstone, who, during the time she took over the family business, squandered billions of dollars in stock value.
Then there are Paramount’s main business drivers – CBS, NFL TV rights, local stations, MTV, BET and Nickelodeon – all crushed by cord cutting.
Its studios suffer from a lack of interest in cinema.
The streaming service is still losing money.
That’s why Paramount’s stock lost nearly $1 billion in market value immediately after Shari pulled a 180, literally saying no last Tuesday to a deal putting her family’s fortune on the line.
Is Redstone just incompetent?
Maybe, but think about it: all traditional media is suffering and needs a savior.
Analyst Rich Greenfield recently posted on social media that Netflix’s market value is higher than that of the top four media content providers combined.
Yes, Paramount is just the weakest of a weak group, but that doesn’t mean Shari likes being treated like a pikeman.
What pushed her to take the plunge to make a deal that was literally on the verge of being approved by the Paramount board was that she felt like Skydance was undermining and undermining her.
Shari was of the opinion – and this is no exaggeration – that Skydance had the money to pay her whatever she wanted.
The company is led by film producer David Ellison, who has the same name as Oracle Chairman Larry Ellison because they are father and son.
Last time I checked (and so did Shari), Larry is one of the richest men in the world with a net worth of over $150 billion, which means he has more than enough d money to support his son’s ambitions to own a media company and manage Shari’s. side of commerce.
But they didn’t do so in part because of the strange way the Redstone family controls Paramount.
Shari “owns” the company through a bit of financial alchemy, devised by her father, holding what are called voting or controlling shares.
This makes any potential sale of its stake a bit shaky, as there are also common shareholders of Paramount.
They always threaten to sue, and they did it in this case also because they got almost nothing to begin with.
So Skydance began finding ways to make the commons happy at Shari’s expense, reducing her payout to nearly $2 billion and then refusing to compensate her in the event of a lawsuit.
I’ve interviewed people on all sides of the drama, and they all offer variations of the same story; Paramount board members who didn’t like the Ellisons whispering in Shari’s ear killed the deal; Shari, too emotional about letting her baby go, ultimately failed him.
But one thing is certain: no one likes to be deprived of a penny.
From what I can gather, David and his business partners at RedBird Capital did not think twice about reducing Shari’s payment; they believed she had no choice but to sell, as the melting ice cube of a media company was slowly dissipating and other buyers either had no money or faced regulatory hurdles.
This makes sense on paper.
What’s not is that David Ellison and Shari weren’t on speaking terms for weeks before she pulled out, which is always a bad sign for any acquisition.
Reminder: David started courting Shari months ago, probably because he really wants the Paramount properties and his status as a media mogul.
Then they simply stopped talking as the terms began to change.
When it comes to negotiation, silence is never golden; you need to approach it like you’re inviting the prom queen to the ball.
And you activate the charm.
David Ellison didn’t do that.
His people say it’s not his fault; lawyers recommended he stay away.
Either way, that’s why he was dumped.
He failed at negotiation 101.
I attribute this to inexperience since this is David’s first big dance.
But its business partner, RedBird, is run by veteran media banker Gerry Cardinale, one of the best in the business who has more EQ (emotional intelligence) than anyone on Wall Street, so you’d think he would have stepped in. My reports show no.
Again, Cardinale and the people at Skydance think Shari doesn’t have many good options — and that she’ll come back with a weaker hand, my sources say.
But they were wrong before and they are dealing with a Redstone; A lot of family drama happened when Shari ran the place which we don’t have the space to get into here.
Shari has an ego. Let’s also assume she learned a few things from her old man.
She knows that David really wants to build a media empire and that he has Dad’s money to do it.
This brings us to another family drama at Skydance involving the Ellisons.
The negotiations were long and drawn out, and I heard that Larry wasn’t crazy about Shari’s last minute change of heart.
He may not want to support the deal for his child, even if she comes back to the table.
Or maybe Larry will do his own 180 if Shari comes back and shows him the money needed to make his son the next Sumner Redstone.