After months of negotiations, Paramount could accept a final merger offer with David Ellison’s Skydance Media.
Paramount Global and Skydance Media reached an agreement for a merger after months of harsh negotiations. The deal only needs to be approved by Shari Redstone, current President of National Amusements and owner of 77% of Paramount’s Class B shares.
Under the agreement, Skydance would pay $3.5 billion for 50% of Paramount Global shares, priced at $15 each. The current market stock price of Paramount shares is $12.8, up 7.47% today after the announcement.
Redstone would receive $2 billion for her stake, with the remaining $1.5 billion going to Paramount Global. This stake will repay part of the $14.6 billion long-term debt Paramount held as of May 2024.
Then, Paramount would fully acquire Skydance, making the latter’s CEO David Ellison the majority shareholder of Paramount Global. Under a previous agreement, Skydance was valued at $5 billion, but sources familiar with the matter said Ellison lowered his ask to sweeten the overall deal.
Accepting the Skydance merger will void another offer courting Paramount in previous months. This deal, made conjointly by Sony and equity firm Apollo, offered $26 billion in cash for a merger with Paramount Global.
Class B shareholders preferred the Sony offer as it would have immediately wiped out Paramount’s debt. However, it would cause several regulatory hurdles by the US antitrust authority. It would also require a separate ownership structure for CBS as foreign firms cannot own nationwide broadcasting networks.
The future of Paramount
Were the agreement to fall through, it would spark a new era for Paramount Global, a legacy media company with a large library of titles and brands.
In the immediate future after the deal, Paramount Global will likely face a lawsuit from Class B shareholders who generally oppose the Skydance agreement. It’s still unclear who between Paramount and Skydance will handle the lawsuits.
The lawsuits could potentially paralyze Paramount’s operations in the following years, at a time of difficult transition for the whole entertainment industry.
Consolidation between entertainment giants characterized the entire industry in the past few years. Streaming, the COVID-19 pandemic, and last year’s Hollywood strikes reduced revenues and streamlined resources all across the board.
Legacy firms like Paramount, Disney, and Warner Bros Discovery are generally joining forces to face these challenges. In general, Hollywood prefers the Skydance deal over Sony’s bid, which would completely remove a major player instead of consolidating within the industry.
But Paramount’s debt will remain and Skydance’s merger will not solve the industry’s precarious position.
