Paramount Global and Skydance Media Agree on Merge Deal

Paramount Global and Skydance Media Agree on Merge Deal

Paramount Global parent company National Amusements and Skydance Media have agreed to merge less than a month after they previously ended deal talks, CBS News is reporting.

Paramount, the owner of Paramount Pictures movie and television studios, along with the CBS television network and CBS News, announced the news yesterday. Skydance, an entertainment business founded by David Ellison, will now have controlling stakes in Paramount.

The merger will feature the other media brands that Paramount also owns, as well. Those brands include Paramount+ streaming service, Nickelodeon, BET, MTV and Comedy Central.

The transaction ends months of speculation around the future of Paramount. Besides the interest from Skydance, the company also reportedly attracted a $26 billion bid from a conglomerate that includes Sony Pictures and private equity firm Apollo Global Management. A range of prominent media and entertainment industry executives were also said to have expressed interest in a possible deal for Paramount.

Under the two-step deal, Skydance will first pay $2.4 billion for National Amusements, the latter of which controls 77% of the voting shares of Paramount.

Shareholders with non-voting stock will then receive $15 per share, or one share of non-voting stock in the new company.  Class A shareholders who are associated with National Amusements can choose to either receive $23 per share, or the right to get 1.5333 non-voting shares in the merged company.

Paramount Global would then merge with Skydance in an all-stock transaction. That merge will place the latter company’s value at $4.75 billion.

The deal also gives other potential bidders for Paramount 45 days to submit a competing offer. That effort is meant to appease shareholders who felt Skydance’s initial bid undervalued their stake in the media company. If a competing offer isn’t accept, Paramount and Skydance’s merge is subject to regulatory approval.

But if Paramount agrees to accept a more attractive buyout deal, it would be required to pay Skydance a $400 million breakup fee. The 45-day window is seemingly intended to minimize the threat of shareholder litigation against the Paramount board and National Amusements Inc.

The deal will unite Paramount, which is known for such films as Titanic, The Godfather and Raiders of the Lost Ark, with a relative new company to the entertainment industry. Since Ellison launched Skydance in 2010, the company has produced or co-produced such hit movies and television shows as Top Gun: Maverick and the Reacher streaming series.

“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,” Ellison said in a statement. “We are committed to energizing the business and bolstering Paramount with contemporary technology, new leadership and a creative discipline that aims to enrich generations to come.”

Under the merger, Ellison will serve as chairman and CEO of Paramount. Jeff Shell, who currently serves as the chairman of RedBird Sports and Media, a unit of investment firm RedBird Capital Partners, will become president. Shell is the former CEO of NBCUniversal.

For Shari Redstone, the controlling shareholder in National Amusements, the deal brings to a close her family’s long control of Paramount. The studio was built on the foundation laid by her late father, entertainment mogul Sumner Redstone. In recent years, National Amusements’s effort has focused on growing Paramount’s streaming footprint, along with the continued expansion of its core network and cable television series, as well as movie businesses.

“In 1987, my father, Sumner Redstone, acquired Viacom and began assembling and growing the businesses today known as Paramount Global,” Redstone said in a statement. “He had a vision that ‘content was king’ and was always committed to delivering great content for all audiences around the world.

“That vision has remained at the core of Paramount’s success and our accomplishments are a direct result of the incredibly talented, creative and dedicated individuals who work at the company,” Redstone added.

The deal follows the April 29 departure of former Paramount Global CEO Bob Bakish. He was replaced by an Office of the CEO led by three division chiefs: George Cheeks, president and CEO of CBS; Chris McCarthy, president and CEO of Showtime and MTV Entertainment Studios; and Brian Robbins, president and CEO of Paramount Pictures and Nickelodeon.

The deal also follows a Paramount report that revealed an operating loss of $417 million on revenue of $7.6 billion, compared with a loss of $1.2 billion on revenue of $7.2 billion in the year-ago period. Skydance, which is privately held, expects its annual revenue to reach $1 billion in 2024.

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