Dawn Chmilewski
(Reuters) – Paramount Worldwide’s board of directors approved a merger deal with Skydance Media on Sunday, opening a new chapter for one of Hollywood’s oldest studios.
The deal could be finalized as soon as Sunday night.
The deal marks the end of an era for the Redstone family, whose late patriarch Sumner Redstone transformed the family’s drive-in theater chain into a media empire that included Paramount Pictures, CBS Broadcasting network and cable networks Comedy Central, Nickelodeon and MTV.
The merger would combine Paramount, the company behind such classics as “Chinatown,” “The Godfather” and “Breakfast at Tiffany’s,” as its financial partner on several of its recent major films, including “Top Gun: Tragedy.” “Solo”, “Mission: Impossible 6”, “Dead Reckoning” and “Starcraft: Into Darkness”.
The deal would make Skydance founder David Ellison, 41, Hollywood’s newest power broker. He will inherit a media company facing challenges as it navigates an entertainment business upended by the streaming revolution.
Paramount has lost nearly $17 billion in value since the end of 2019 as its traditional TV business erodes faster than its Paramount+ streaming service can turn a profit.
The atmosphere in the executive suite was tense. The company’s chief executive, Bob Bakish, was ousted in April amid a conflict with the company’s controlling shareholder, Shari Redstone, over the Skydance deal. He was replaced by three senior executives in the “Office of the CEO” group, which proposed cutting $500 million, selling certain assets and looking for possible joint venture partners for Paramount+.
The plans, which mean more layoffs at a company already experiencing a wave of layoffs, may now be called into question.
Once the deal closes, veteran media executive and former NBCUniversal CEO Jeff Shell is likely to join Allison at Paramount, according to two people familiar with the matter. Scheer left NBCU last year following an investigation into inappropriate relationships and later joined the RedBird as chairman of sports and media.
The Paramount-Skydance deal culminated months of negotiations that seemed to have derailed when Redstone abruptly called off the talks on June 11.
At the time, Skydance and its partners had reached an agreement to acquire National Amusements, the Redstone family’s holding company, which owns 77% of Paramount’s voting shares. However, talks have stalled on other issues, including National Amusements’ requirement that a majority of non-Redstone shareholders approve the deal, a condition Skydance believes is impossible to achieve.
Other potential bidders for National Entertainment have also emerged: Hollywood independent producer Steven Paul, Seagram heir Edgar Bronfman, who is backed by private equity firm Bain Capital, and IAC Chairman Barry Diller .
Meanwhile, discussions between Ellison and Redstone quietly resumed and became more constructive, according to two people familiar with the matter.
Skydance has increased the amount paid by the Redstone family for the sale of National Amusements to $1.75 billion, a source familiar with the terms of the deal said. It also strengthens legal protections against possible shareholder lawsuits, clearing the way for a new deal, the sources said.
Sources told Reuters that Ellison and his financial backers, including Redbird Capital Partners, also took steps to strengthen Paramount’s balance sheet, committing $1.5 billion in capital. They also offered to buy about 50% of Paramount’s non-voting stock for $15 a share, the sources said.
Another source said holders of Class A voting shares will receive $23 per share.
The deal also gives Paramount 45 days to find a better offer, setting up the possibility of another plot twist in an already messy deal.
