Paramount Global will merge with Skydance Media after months of grueling negotiations. Here are all the details.
Paramount Global and Skydance Media officially agreed to a $8 billion merger and acquisition deal after 7 months of negotiations. “New Paramount”, as the company has been informally dubbed, will tackle the several challenges strangling the entertainment sector.
The deal is structured in several phases and values “New Paramount” at $28 billion. Paramount Global’s market value is currently $8.3 billion, down 70% from its heights during the COVID-19 pandemic.
In the first phase, Skydance will purchase National Amusement’s 77% share in Paramount Global for $2.4 billion. National Amusement’s CEO Shari Redstone was the founder of Paramount Global in 2019 when Viacom merged with CBS. The Redstone family has controlled Paramount in some shape or form for decades.
Conversely, Skydance will pay Paramount Global an additional $4.5 billion in cash to purchase all Class-A and Class-B shares. These shareholders don’t hold a vote in Paramount’s decisions but threatened to sue if Redstone pursued a deal without consultation. Finally, Skydance will add $1.5 billion in cash to refinance part of Paramount’s $15 billion long-term debt.
In the second phase, Skydance will merge with Paramount in an all-stock transaction valuing Skydance at $4.75 billion.
In the end, Skydance will own 70% of Paramount Global: the totality of Class-A shares and 317 million Class-B shares. The deal should close in the first half of 2025 after the regulatory hurdles are completed.
The deal involves a 45-day “go shop” period whereby Redstone can listen to other offers. Hollywood producers Steven Paul and Eric Bronfman came forward with separate offers to acquire Redstone’s share in the company.
The new people in “New Paramount”
The mastermind behind the deal is Skydance Media’s CEO David Ellison, who will become CEO and Chairman of “New Paramount”. Former CEO of NBCUniversal Jeff Shell will take on the role of President.
Jeff Shell is currently a Redbird Capital executive. Redbird supplied part of the cash needed for the transaction and will become a full-fledged Paramount shareholder under the new deal.
Investment firm KKR also provided a significant share of the cash required. The rest was given by private investors including David’s father Larry Ellison, co-founder and CEO of Oracle. Larry Ellison is a giant tech pioneer who’s at the forefront of the AI revolution. Speculations around his role in “New Paramount” include applications of artificial intelligence in the entertainment sector.
“This is a defining and transformative time for our industry and the storytellers, content creators, and financial stakeholders who are invested in the Paramount legacy and the longevity of the entertainment economy,” David Ellison said.
Hollywood likes the deal as it sees a major legacy media firm consolidating “in-house” instead of disappearing altogether. For now, industry members think, the fate of Paramount Global is in good hands.
