David Ellison’s Skydance Media doesn’t want to give negotiations up with Paramount Global despite Sony’s $26 billion rival deal.
David Ellison’s studio Skydance Media offered a sweeter deal to Paramount Global for its merger and subsequent acquisition, sources inside the industry told Deadline. Skydance’s offer is also backed by the investment firm RedBird Capital and David’s father, Larry Ellison, CEO and co-founder of Oracle.
Larry Ellison is the world’s fourth-richest man, with Oracle at the forefront of the current AI revolution. A few months ago, during the exclusivity period of Skydance’s previous offer to Paramount, CNBC speculated the Ellisons may be interested in experimenting with AI technology into the communication sector.
According to the deal, Skydance would purchase Paramount’s majority stake currently owned by Shari Redstone and her National Amusements firm. Then, Paramount would acquire Skydance for $5 billion and install a new CEO: Jeff Shell, current chief executive of NBCUniversal.
On Thursday, Deadline learned that the previous deal, valued at $1 billion, was sweetened to $3 billion to make it appealing for Class B investors.
Sources familiar with the matter revealed that, though Shari and the board were generally happy with this deal, lower-class investors were not. Paramount Global is currently buried under piles of debt, although its previous quarterly earnings were much better than expected.
The Skydance deal would not solve Paramount’s cash problem. And it’s not the only offer on the table.
The Sony/Apollo offer
While negotiations with Skydance are far from over, another pair of large investors are courting Paramount Global.
Sony, one of the world’s largest electronics and entertainment firms, is ready to put $26 billion into a merger with Paramount Global. The offer is also backed by Apollo, one of the largest private equity firms on the planet.
Class B investors clearly prefer this offer to Skydance’s. It would immediately eliminate Paramount Global’s debt and solidify its position during a period of high uncertainty in the global entertainment sector.
However, such a deal would certainly face opposition from US regulators. The American antitrust authority would worry about two of the largest entertainment firms in the world merging.
Moreover, Paramount Global also owns the CBS brand, a broadcasting communication network. Sony, a Japanese firm, could not legally own CBS under the explicit provision of US law.
Hollywood and the industry in general also hope Sony’s offer falls into the void. Exhibitors would have fewer “event” movies, and Sony would gain an immense amount of leverage against any Hollywood major.
Shari Redstone too favours a deal with Skydance. All she needs, however, is the backing of Paramount Global’s investors, which will be anything but easy to get.
