The merger would combine Paramount, responsible for such classic films as “The Godfather,” “Chinatown” and “Breakfast at Tiffany’s,” with its financial partner in several recent major films, including “Top Gun: Maverick,” “Mission: Impossible – Sentence” and “Star Trek Into Darkness.”
David Ellison, the 41-year-old tech mogul who founded Skydance, will serve as a board member and chief executive of the new Paramount. Jeff Shell, the former chief executive of NBCUniversal, will be its new chairman.
The deal represents the end of an era for Shari Redstone, whose father and late patriarch, Sumner Redstone, built the family-owned drive-in chain into a media empire that included Paramount Pictures, the CBS television network and the cable networks Comedy Central, Nickelodeon and MTV.
“Given the changes in the industry, we want to strengthen Paramount for the future, while ensuring that content remains king,” Redstone, chairwoman of Paramount and National Amusements, said in a statement, citing a phrase coined by her father.
New agreement
Skydance raised the Redstone family’s payment for the sale of National Amusements to $1.75 billion, according to one of the people familiar with the terms of the deal. It also enhanced legal protections against potential shareholder lawsuits, clearing the way for a new deal, the person said.
Under the terms of the deal, Ellison-owned Skydance will merge with Paramount in an all-stock deal that will value Skydance at $4.75 billion, creating a company worth $28 billion.
Ellison and his financial partners, the Ellison family and Redbird Capital Partners, will pay $15 per share in cash or stock to Paramount’s Class B non-voting shareholders, representing a 48% premium to July 1.
Holders of Class A voting shares would receive $23 per share in cash or stock, representing a 28% premium to July 1.
Following closing, Skydance’s group of investors will own 100% of the Class A voting shares of the new Paramount and 69% of its outstanding Class B shares.
The deal also gives Paramount 45 days to find a better offer, leaving open the possibility of another plot twist in an already chaotic negotiating process.
Paramount’s pain
Ellison, the son of Oracle co-founder Larry Ellison, will inherit a media company that faces a mountain of challenges as it navigates an entertainment business upended by the streaming video revolution.
Paramount has lost nearly $17 billion in value since the end of 2019 as its traditional television business has eroded faster than its Paramount+ streaming service could generate profits.
There have been tensions in the boardrooms. Chief executive Bob Bakish was ousted in April after clashing with Redstone over the Skydance deal. He was replaced by a trio of executives who occupy the “office of the CEO,” a group that has proposed making $500 million in cuts, selling certain assets and exploring a potential joint venture partner for Paramount+.
Ellison pledged to bring best-in-class technology and a modern infrastructure to Paramount+ and the free streaming service, Pluto TV, while enhancing Paramount’s traditional television networks.
“We are committed to reinvigorating the business and strengthening Paramount with contemporary technology, fresh leadership and a creative discipline that aims to enrich generations to come,” Skydance said in a statement announcing the deal.
The Paramount-Skydance deal was finalized after months of talks that appeared to have been derailed when Redstone abruptly called off negotiations on June 11.
At the time, Skydance and its partners had reached an agreement to acquire National Amusements, which owned 77% of Paramount’s voting stock. However, talks reached a standstill over other issues, including National Amusements’ request that the deal be approved by a majority of shareholders other than Redstone, a condition that Skydance considered impossible.
Other potential bidders for National Amusements emerged: Hollywood independent producer Steven Paul, Seagram heir Edgar Bronfman, backed by private equity firm Bain Capital, and IAC chairman Barry Diller. Even earlier, Sony Pictures and buyout firm Apollo Global Management had expressed interest, though a deal never materialized.
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