New Delhi: In a surprising turn of events, Paramount Global’s parent company, National Amusements, and Skydance Media have agreed to merge, following the abrupt end of their previous negotiations just a month ago.
Paramount, known for its iconic Paramount Pictures movie and television studios, CBS television network, and CBS News, revealed the merger in a late Sunday news release. The entertainment giant, which also owns the streaming service Paramount+, as well as Nickelodeon, BET, MTV, and Comedy Central, is set to combine with Skydance Media. Skydance was founded by David Ellison, son of Oracle founder Larry Ellison.
A Resolution to Speculation
This transaction ends months of speculation regarding Paramount’s future. Reports had previously surfaced about a $26 billion bid from a consortium that included Sony Pictures and private equity firm Apollo Global Management. Several prominent media and entertainment industry executives had also shown interest in acquiring Paramount.
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Details of the Two-Step Deal
The merger involves a two-step process. Initially, Skydance will acquire National Amusements for $2.4 billion. National Amusements controls 77% of Paramount’s voting shares. Shareholders with non-voting stock will receive $15 per share or one share of non-voting stock in the new company.
Class A shareholders, excluding National Amusements, will receive $23 per share or the right to 1.5333 non-voting shares in the merged entity. Subsequently, Paramount Global will merge with Skydance in an all-stock transaction valuing Skydance at $4.75 billion.
Open to Competing Bids
To appease shareholders who believed Skydance’s initial bid undervalued Paramount, the deal allows for a 45-day period during which other potential bidders can submit competing offers. The transaction is subject to regulatory approval.
Merging Hollywood Titans
The merger combines Paramount’s storied legacy, which dates back to 1912 and includes classics like “Titanic,” “The Godfather,” and “Raiders of the Lost Ark,” with Skydance, a relative newcomer founded in 2010. Skydance has produced hit films and TV shows such as “Top Gun: Maverick” and the “Reacher” streaming series.
David Ellison, who will serve as chairman and CEO of Paramount, expressed his excitement about the merger: “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. I am incredibly grateful to Shari Redstone and her family who have agreed to entrust us with the opportunity to lead Paramount.”
Shari Redstone’s Farewell
For Shari Redstone, the controlling shareholder of National Amusements, the deal marks the end of her family’s long tenure at Paramount, established by her late father, Sumner Redstone. She emphasized the continued focus on delivering great content and growing Paramount’s streaming footprint.
“In 1987, my father, Sumner Redstone, acquired Viacom and began assembling and growing the businesses today known as Paramount Global,” said Redstone. “He had a vision that ‘content was king’ and was always committed to delivering great content for all audiences around the world.”
Transition and Leadership
With the merger, Ellison will be joined by Jeff Shell, former CEO of NBCUniversal and current chairman of RedBird Sports and Media, as president of the new entity. This leadership change comes after the departure of former Paramount Global CEO Bob Bakish in April.
Looking Ahead
The merger follows a period of strategic cost-cutting and re-evaluation for Paramount, including a $500 million cost reduction plan and potential partnerships for Paramount+. The future strategy under Skydance’s leadership remains to be seen.
In its most recent quarter, Paramount reported an operating loss of $417 million on $7.6 billion in revenue. In comparison, Skydance, a privately held company, is expected to reach annual revenue of $1 billion in 2024.
Industry Implications
This merger is part of a broader trend of consolidation within the media industry, as traditional media giants like Paramount and CBS compete with much larger technology and entertainment conglomerates.
This significant move is expected to reshape the media landscape, combining the legacy of old Hollywood with the innovation and dynamism of new-age entertainment, paving the way for a transformative future in the industry.
