New Details on Skydance’s Offer to Buy Paramount; Studios Would Merge, Paramount’s Stock Would Remain Public
The deal is not shaping up to be a full takeover of Paramount by Skydance, though no details are currently set in stone.
After months of speculation, all signs point to a deal between Skydance Media’s David Ellison and Paramount Global in the next few weeks. The two sides are currently in an exclusive negotiating period as look to hammer out a deal that would see Ellison take control of Paramount. That had been the expectation over the past few weeks, but new details reported by CNBC and other outlets indicate that the agreement could look far different than the one analysts have been prognosticating for months.
- Bloomberg reports that Ellison has agreed to pay $2 billion for Shari Redstone’s voting stock in Paramount Global.
- Ellison and his financial consortium would own 45% to 50% of the new company and would keep its stock public.
- Reports indicate Ellison would keep Paramount+, but may restart sale talks for BET Media Group and other assets.
Bloomberg is reporting that the two sides have a “tentative deal” for Ellison to acquire the controlling shares of Paramount already in place. This week, Bloomberg reported that Ellison, RedBird Capital, and other financial backers have agreed to pay just north of $2 billion for National Amusements Inc., the holding company owned by Shari Redstone that controls 77% of Paramount’s voting stock.
CNBC reports that Ellison and his partners would own 45% to 50% of the new company, and the Skydance movie studio would merge with Paramount’s storied production house. However, as of now, no details have been completely finalized. When the companies entered into exclusive negotiations last week, they agreed to a 30-day window to conclude talks and come out the other side with a deal.
One key difference between current reports of the Ellison and Skydance offer and the discussions of the deal from when it first became public is that as of now, Paramount’s stock will remain a publicly traded commodity. When word of Ellison's interest first surfaced in late January, reports said that he wanted to take Paramount’s stock private in order to reconstruct the company in his own vision without worrying about Wall Street’s take on his moves.
Although nothing is written in stone between Ellison and Paramount yet, one of the company’s shareholders is already making its objections known. As reported by The Wrap, Matrix Asset Advisors owns hundreds of thousands of shares of Paramount on behalf of various clients, and, in a letter to the Paramount board of directors, called the deal a “home run” for Redstone, but said it unfairly rewards her at the expense of the company’s other shareholders.
“We are distressed by recent reports that the Board is strongly considering a sub-optimal bid from Skydance that prioritizes the interests of one shareholder over the broader shareholder base,” the letter reads. “As reported, this deal focuses on monetizing Shari Redstone’s shareholding for cash at a significant premium. The vast majority of shareholders would not receive a similar premium and would be forced to finance a speculative investment in Skydance in a transaction significantly dilutive to shareholder value. Overall, this transaction, as contemplated, would be detrimental to the company’s value and contrary to the Board’s fiduciary duty.”
What Will Happen to Paramount Assets if Skydance Deal Goes Through?
According to Bloomberg, streaming assets at Paramount such as Paramount+ and the free, ad-supported platform Pluto TV would be preserved. The new company could try to merge with a streaming peer like Max or Peacock; recent reports indicate Paramount and NBCUniversal have already had talks about offering a combination of Paramount+ and Peacock in some capacity. The Bloomberg report also mentions Paramount has had discussions with Amazon’s Prime Video about some kind of deal.
Other Paramount assets could well find themselves on the sale table if the potential Skydance pact becomes a reality. CBS is unlikely to be sold, but Paramount’s international TV networks could possibly come up for sale. BET Media Group, which has been brought up as a candidate for divestment by Paramount on more than one occasion, may actually change hands if Paramount falls under Ellison’s control.
In the unlikely event that the Ellison deal falls through completely, other suitors are waiting in the wings. Apollo Global Management has made a $26 billion+ bid for all of Paramount, but so far the special committee designated by Paramount to consider M&A opportunities has declined to engage with that offer, despite the fact that it is many times larger than Ellison’s.
As of now, it appears that Paramount is singularly focused on Skydance’s offer. Will Shari Redstone be able to force the deal through and net herself an impressive payday in the process? Observers will have an answer one way or the other in the next few weeks.
Paramount Plus
Paramount+ is a subscription video streaming service that includes on-demand access to 40,000+ TV show episodes from BET, CBS, Comedy Central, MTV, Nickelodeon, Nick Jr. and more. The lineup includes “1883,” “Tulsa King,” “Star Trek: Discovery,” Nickelodeon’s “SpongeBob SquarePants,” and “PAW Patrol.” Subscribers can watch the NFL, college football, The Masters, college basketball, UEFA Champions League, UEFA Europa, Serie A, and NWSL. The service also offers the option to watch your live CBS affiliate. The upgraded ad-free package includes premium movies and shows from Showtime.