Hollywood thinks the Paramount-Skydance merger is a done deal. However, Sony Pictures may have something to say.
Hollywood celebrities and executives cheered yesterday’s approval of the Paramount-Skydance deal despite the tons of contractual and regulatory work that still needs to be done. The entire film industry called this a major victory for the entertainment sector and a sign of good times to come.
Under the deal, Skydance Media will acquire a majority stake in Paramount Global, one of the biggest and oldest media companies in the world. The deal is divided into two phases: Skydance will purchase Shari Redstone’s 77% stake in Paramount Global and later the two companies will merge. The deal is valued at $8 billion divided into $6 billion in cash and $2 billion in shares. The cash inflow will go toward refinancing Paramount’s $15 billion long-term debt.
The new conglomerate will have a $28 billion total value. When it’s all set and done - as early as mid-2025 - Skydance’s chief executive David Ellison will become the CEO of “New Paramount”. Former NBCUniversal CEO Jeff Shale will become President.
The deal also includes a 45-day “go shop” clause, where Shari Redstone can listen to other offers. If Redstone scraps the deal, she will have to pay $400 million to Skydance.
Reactions from Hollywood
Since the announcement on Tuesday, several Hollywood celebrities have praised the deal. “This is a match made in movie heaven,” as Jane Fonda put it. “[David Ellison] deeply believes in the power of creative storytelling and creative storytellers and has the essential expertise and understanding of how technology can enhance the creative experience.”
Mark Wahlberg also praised Ellison’s skills as an executive, saying the deal is “a win for the industry.” Actor and director John Krasinski added “For nearly the past decade I have had the good fortune to work with both of these companies on some of the most exciting work of my career. The fact that they are now joining forces ensures that I get to continue the collaboration with an incredibly talented and enthusiastic film family.”
Sony Pictures Chairman and CEO Tom Rothman said “I have great respect for David Ellison and I think he is a very capable executive, and if it ends up going that way in the end, in the end, I’m sure he’ll do a fine job.” Before the Skydance agreement, Sony proposed its $26 billion M&A offer to Redstone.
The Sony deal, backed by equity giant Apollo, would have likely dragged on for years with no certain approval by federal authorities. Especially as CBS, one of Paramount’s brands, cannot be owned by a foreign firm.
Hollywood hated the Sony-Apollo deal as it would have essentially wiped out Paramount as an independent entity. After signing an NDA on the Sony offer in May, Redstone declined to comment publicly on her views. Whether the offer is still on the table remains an open question.
