In a surprising move, Skydance Media reached a new tentative agreement with Paramount Global for a merger and acquisition.
In a surprising comeback, Skydance Entertainment reached a tentative deal for a merger and acquisition with National Amusements, Paramount Global’s largest shareholder. National Amusement controls 77% of Paramount’s voting shares and its CEO, Shari Redstone, is also Paramount’s chairwoman.
With several legacy media and communication brands under its umbrella, including CBS, Paramount Pictures, and MTV, Paramount Global is one of the world’s most important entertainment firms. It was created from the Viacom-CBS merger in 2019.
Soon after its creation, Paramount Global plunged head-first into the streaming wars. In 2019, Hollywood majors tried to challenge Netflix’s global dominance of the streaming sector by launching their proprietary platforms.
The strategy mostly backfired, leaving Netflix as the uncontested winner of the streaming wars. Only Disney managed to survive, although deeply scarred by its unprofitable (until recently) platform Disney+.
Left without a viable streaming option, facing the decline of linear T, and with theaters in crisis after the COVID pandemic and the 2023 strikes, Paramount seemed on the verge of collapse.
Consolidation was the only option left for Paramount in order to survive. Since late 2023, several bidders courted Shari Redstone and her juicy share.
For months, it seemed David Ellison’s Skydance Media was the chosen one. After six months of grueling negotiations, however, the deal seemingly failed. Other bidders, including producers Steven Paul and Edgar Bronfman, entered the competition with their offers but similarly failed to reach an agreement.
Ellison’s comeback
On Wednesday, CNBC surprisingly reported that talks between Redstone and Ellison continued after the failed deal and reached a tentative agreement this week.
Under the new deal, Skydance would purchase Redstone’s share for $1.75 billion. That is less than the $2 billion previously offered. The old deal also included a $3.5 billion buyout option for Class-B shareholders in order to service part of Paramount’s skyrocketing debt.
It’s unclear whether the new offer involves a similar option. The other Paramount bidders focussed solely on Redstone’s majority share.
Shari Redstone could legally decide by herself, without consulting other shareholders. However, Class-B owners threatened to sue if she didn’t consult with them on the decision.
Skydance and National Amusements agreed to a 45-day “go shop” period where Redstone would hear other offers. Paul and Bronfman are still reportedly in negotiations. On the other hand, a previous $26 billion M&A offer by Sony and Apollo was reportedly withdrawn.
Meanwhile, Paramount’s triumvirate of CEOs is planning a $500 million cost-cutting plan to safeguard the company’s patchy financials. Combined with the recent successes at the box office (A Quiet Place: Day One grossed $100 million worldwide in the opening weekend) the company hopes to stall as long as possible to negotiate the best deal.
