Skydance Media’s Deal to Buy Shari Redstone’s Family Company Is Back On
Skydance would pay $1.75 billion for National Amusements under the preliminary deal
David Ellison’s production company has reached a preliminary agreement to buy National Amusements, according to people familiar with the matter, rekindling deal talks that fizzled last month. It then plans to merge Skydance with Paramount Global PARA 5.72%increase; green up pointing triangle, a deal subject to approval by a special committee of Paramount’s directors.
National Amusements, which owns about 77% of the voting shares of Paramount, has referred the new deal to the special committee for review. The panel met Tuesday evening to discuss it, the people said.
Under the proposed terms, Skydance would pay $1.75 billion for National Amusements, the people said. Skydance, known for popular titles such as Amazon’s “Tom Clancy’s Jack Ryan,” and National Amusements have also agreed to a 45-day “go-shop period” in which other interested Paramount bidders can make offers for the company.
The will-they, won’t-they saga has turned into one of the messiest media deals in recent memory during which Paramount’s CEO and four directors parted ways with the company. The “Office of the CEO” is now run by three divisional heads.
A deal would usher in a new chapter for the iconic Hollywood company, famous for films such as “Titanic,” “Indiana Jones” and “The Godfather.” Paramount, owner of the namesake film studio, broadcaster CBS and cable channels such as MTV and Nickelodeon, has struggled with a cable business that is in decline, a hefty debt load and a costly build-out of its streaming business.
Under the new preliminary agreement, National Amusements isn’t mandating that the Paramount merger be approved by a majority of non-Redstone shareholders, a sticking point in the last round of deal talks.
Skydance, run by Ellison, the son of Oracle co-founder Larry Ellison, has been pursuing a deal for Paramount for months, a long and complicated process that has moved in fits and starts. Redstone ended discussions to sell her controlling stake in Paramount to Skydance and merge the two companies last month, an about-face that surprised many in Hollywood and on Wall Street.
Paramount shares rose more than 6% in after-hours trading following The Wall Street Journal and other media outlets’ reports that a preliminary deal was reached.
Skydance had sweetened its offer during months of negotiations, as the two sides continued to haggle over financial and operational terms. Redstone rejected the deal before the Paramount special committee was scheduled to vote on the merger.
Under the terms of the deal that fell apart a few weeks ago, Skydance would have bought National Amusements for around $1.7 billion in cash and would have provided $4.5 billion to buy out a certain number of Paramount’s nonvoting shares and non-Redstone voting shares. Skydance also would have injected $1.5 billion onto Paramount’s balance sheet, which it could use to pay down its hefty debt load.
Other bidders have pursued deals for National Amusements in recent months, including film producer Steven Paul, media executive Edgar Bronfman Jr.and IAC Chair Barry Diller. The New York Times earlier reported Diller had signed a nondisclosure agreement to do due diligence on NAI—the first step to doing a deal.
Paramount’s market value has fallen sharply since Redstone years ago won a battle to succeed her father, media mogul Sumner Redstone. The stock price decline has severely undercut her family’s fortune.
Paramount’s three CEOs—George Cheeks, CEO of CBS; Chris McCarthy, CEO of Showtime/MTV Entertainment Studios and Paramount Media Networks; and Brian Robbins, CEO of Paramount Pictures and Nickelodeon—are looking to aggressively cut costs as they contend with more than $14 billion in debt. The trio was installed in April after it parted ways with its former CEO Bob Bakish, a 27-year veteran of the company who had raised concerns about the Skydance deal.
At the company’s annual shareholder meeting, the office of the CEO stated its goal was to reach $500 million in annual cost savings.
The CEOs had begun exploring international streaming partnerships that could help save on costs overseas, relying on other partners for distribution, people familiar with the plans said.
Paramount was also planning more layoffs in August that are expected to hit the corporate marketing and streaming divisions particularly hard, people familiar with that initiative said. Managers were instructed to provide human resources with names of employees to be cut.