Paramount Agrees to Skydance Merger, Marking End to Redstone Era

(Bloomberg) — Paramount Global, the parent of CBS and MTV, agreed to merge with Skydance Media, handing control of a major Hollywood studio to independent producer David Ellison and ending one of the messiest and most dramatic merger deals in recent history.

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As part of the complicated deal that’s been months in the making, Paramount Chair Shari Redstone agreed to sell her family’s National Amusements Inc., which controls about 77% of the voting stock in Paramount, to the film and TV producer for $2.4 billion, according to a statement released by the company Sunday.

The accord marks an abrupt turnaround after talks between Redstone and Ellison, the son of Oracle Corp. co-founder Larry Ellison, collapsed last month. Redstone’s decision at the time to end discussions shocked the board and frustrated employees and investors, sending the stock tumbling.

The Ellison family and RedBird Capital Partners have agreed to invest more than $8 billion in the business. That includes $1.5 billion to help pay down Paramount’s debt and $4.5 billion to buy Paramount shares.

Paramount’s Class B nonvoting shareholders would receive $15 a share in cash or stock, while Class A shareholders who aren’t members of the Redstone family would receive $23 a share. After the close, the Ellison-led group will own about 70% of Paramount’s shares outstanding. The sellers have 45 days to seek better offers.

Ellison, 41, will be chairman and chief executive officer. Jeff Shell, a former NBCUniversal executive, will be president. Ellison, who was raised around Silicon Valley luminaries like Steve Jobs, believes the company could thrive if it invests more in technology. Skydance and Paramount will hold an investor call at 8:30 AM Eastern Standard Time.

New owners and additional capital could provide beleaguered Paramount with a fresh start. Laden with more than $14 billion in debt, the iconic Hollywood company has struggled to compete in streaming and has suffered as cable TV audiences canceled their subscriptions and abandoned traditional channels like CBS and Nickelodeon. The company had a net loss of $554 million, or 87 cents a share, in the first quarter.

Paramount, which owns the legendary Paramount Pictures movie studio that has produced films including Titanic and The Godfather, has been controlled for three decades by the Redstone family. But the shares have lost more than half of their value since the Redstones recombined CBS Corp. and Viacom Inc. in 2019 to create Paramount Global.

“Given the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king,” Redstone said in a statement. “As a longtime production partner to Paramount, Skydance knows Paramount well and has a clear strategic vision and the resources to take it to its next stage of growth. We believe in Paramount and we always will.”

Redstone, 70, pushed for a merger of Paramount with Skydance over a deal with other interested parties, an outcome she believed would be in the best interests of her family and the company’s legacy.

She persisted despite opposition from the company’s management and other shareholders, the resignation of four board members and the looming specter of litigation.

She dismissed the company’s chief executive officer, a vocal skeptic of the deal, replacing him with a trio of leaders who have promised $500 million in annual cost savings.

Just as a deal with Skydance seemed imminent last month and a special committee of the board convened to discuss the proposal, Redstone backed out.

By that point Ellison had reduced his offer for Redstone’s National Amusements so he could give more money to other Paramount shareholders, a sticking point for the company to agree to the deal but one that turned Redstone off.

Paramount, which was purchased by Shari Redstone’s late father Sumner in 1994, has been up for sale since late last year. National Amusements has held talks with various suitors, including Sony Group Corp. and Apollo Global Management Inc., which proposed a $26 billion deal. But that offer, which would have involved a foreign owner and the consolidation potentially of two large Hollywood studios, was seen as problematic and likely to face tough regulatory scrutiny.

More recently, Barry Diller, the 82-year-old chairman of IAC Inc. and former head of Paramount Pictures, has expressed interest in the company. So has longtime media executive Edgar Bronfman Jr.

Redstone came to see Ellison as her best option. He has been pursuing Paramount for months, sensing a rare opportunity to own one of Hollywood’s oldest studios. Founded in 1912, Paramount Pictures is the home of The Godfather, Star Trek and Forrest Gump.

Paramount is currently being led by a management committee of three senior executives after the company replaced CEO Bob Bakish in April.

–With assistance from Lucas Shaw.

(Updates with details from announcement and background)