Paramount Global to merge with Skydance Media

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

Paramount Global will then merge with Skydance, offering $4.5bn in cash or stock to shareholders and providing an additional $1.5bn for Paramount’s balance sheet.

News emerged last week that talks between Skydance and Paramount were back on, after they collapsed earlier in the summer.

Paramount is the owner of the Paramount Pictures movie and television studios, the CBS television network and CBS News, as well as the Paramount+ streaming service, Nickelodeon, BET, MTV, Comedy Central and other media brands.

Skydance was founded in 2010 by David Ellison, son of Oracle founder Larry Ellison. It has since produced or co-produced hit films and TV shows including Top Gun: Maverick and the Reacher streaming series.

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The deal represents the end of an era for Shari Redstone, whose father Sumner Redstone transformed the family’s chain of drive-in movie theatres into a studio empire.

“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. “I am incredibly grateful to Shari Redstone and her family who have agreed to entrust us with the opportunity to lead Paramount. We are committed to energising the business and bolstering Paramount with contemporary technology, new leadership and a creative discipline that aims to enrich generations to come.”

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

“Our hope is that the Skydance transaction will enable Paramount’s continued success in this rapidly changing environment,” Shari Redstone said in a statement.

Commenting on the merger, Maureen Kerr, Head of Arthur D. Little’s Media & Entertainment practice in the UK, said: “This was not an easy deal to get over the line. Billionaire investor Mario Gabelli, a significant shareholder in Paramount’s parent company, expressed the need to review the transaction’s structure before deciding. He hinted that Redstone withdrawing initially meant Skydance had to sharpen its pencil and improve the number. Skydance did that.

“Gabelli found the financials of the new Skydance deal appealing, explaining that after accounting for debt, it would net National Amusements shareholders about $20 per share. Paramount shares rose to $11.81, and Class A shares to $20.47 following the news.

“However, given that streaming services remaining a drain on cash resources, Paramount+ may still have to enter discussions regarding a Joint Venture with another streaming services entity – likely Warner Bros Discovery – to share the costs of the service.”

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