Paramount, Skydance Merger Talks Die; What Will Shari Redstone Do Now?
Paramount, Skydance Merger Talks Die; What Will Shari Redstone Do Now?
The Paramount drama will continue to drag on now that Redstone has ended discussions with Skydance CEO David Ellison.
After months of negotiations, several stops and starts, and what looked like encouraging signs that a deal was close, the possibility that Paramount Global will merge with Skydance Media is officially over. Talks broke down early this week, and on Tuesday Paramount’s controlling shareholder Shari Redstone said via a statement from her holding company National Amusements Inc. (NAI) that the two sides had “not been able to reach mutually acceptable terms” for a merger. So what else is on the table for Paramount at the moment, and what does the company’s future look like after its most promising deal prospect is now officially dead?
Key Details:
- The Skydance deal had been the apple of Redstone’s eye for months before it dissolved.
- Sony and Apollo are still rethinking the best way to pursue Paramount Global.
- Two new potential bidders have emerged, but the due diligence process has to start all over again for these prospective buyers.
The disintegration of the Skydance talks means that Paramount is essentially back to square one in its deal-seeking. The two sides first engaged way back in December, and in April entered into an monthlong exclusive negotiating period to try and engineer a deal.
That turned out not to be enough time, but Skydance remained in the picture while Paramount seemed to pivot to an all-cash bid from Sony and Apollo Global Management. But Redstone always favored the Skydance deal, because it looked like the best chance of keeping Paramount together as one company; regulatory issues would almost certainly have compelled Sony to sell some Paramount assets, and Sony was mostly interested in the company’s TV and movie studios anyhow. Paramount’s special committee for considering M&A offers approved the Skydance deal last week, but things went downhill rapidly after that.
There’s no official word on why the deal talks broke down. Speculation has arisen that Redstone got wind of some plan or other by Skydance to sell Paramount assets after all, or that Skydance’s reluctance to indemnify Redstone in the likely event that one of Paramount’s shareholders sued to try to stop the deal. Whatever the case may be, it appears that talks about a merger between Skydance and Paramount are officially over.
Ellison also confirmed that talks with Paramount were over this week. According to The Wrap, in a memo circulated to Skydance staff, Ellison praised his employees for their hard work in the merger talks, but said the “chapter” of Skydance trying to join with Paramount had “ended.”
What’s Next for Paramount?
Paramount is still officially engaged with Sony and Apollo regarding their joint bid and the two sides signed non-disclosure agreements in late May so they could get a better look at each other’s books. But the $26 billion bid Sony and Apollo first came to Paramount with is almost certainly off the table amidst reports that the two are rethinking their best next steps with the legacy entertainment giant.
There are still other interested parties. The Wall Street Journal reported earlier this week that former media executive Edgar Bronfman — who once oversaw Warner Music — is preparing to offer between $2 and $2.5 billion to buy National Amusements from Redstone. That would give Bronfman effective control over Paramount, though due diligence has not yet begun, and that process could take several weeks.
Hollywood producer Steven Paul is also looking into a majority stake in National Amusements, but like Bronfman’s interest, there is still a long way to go before a transaction takes place. Bronfman and Paul are still in the initial stages of their interest, and once they get a closer look at Paramount’s finances they may decide the situation is too messy for them.
Billionaire media mogul Byron Allen showed interest in Paramount back in January, and re-confirmed his interest in May, saying he had plenty of capital available to help his bid. But there hasn’t been much public communication between the two sides at any point, and it seems Allen’s interest is merely nominal at present.
If none of those prospective buyers execute a purchase of Paramount, the company has laid out a plan for going it alone. At last week’s annual shareholders meeting, the three-person “Office of the CEO” laid out their vision for Paramount’s future as an independent company, including hundreds of millions in cost cuts and a potential streaming joint venture including Paramount+.
It’s impossible to say what will happen to Paramount next, considering the way things have gone for the company thus far in 2024. I am fairly confident in saying that Warner Bros. Discovery won’t re-enter talks, but that’s the only prediction I’m willing to venture for the time being. It’s likely enough that Redstone herself is unsure of her next step, but one thing is clear: a Paramount and Skydance merger is off the table for good.
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