Skydance Media Strikes Deal for Control of Paramount After Long Pursuit

David Ellison’s Skydance Media has received a key approval vote for the company’s proposed acquisition of National Amusements Inc., the largest shareholder in Paramount Global, after seven months of talks.

The deal was approved Sunday by a special committee of Paramount’s board of directors, a person familiar with the matter told Deadline. The full board is now expected to consider the proposal.

Bloomberg News previously reported on the special committee vote and said a formal announcement would be made on Monday.

Representatives for NAI, Paramount and Skydance did not immediately respond to Deadline’s request for comment.

While the board’s action is a milestone, one of the features of the current agreement is a 45-day “go-shop” provision that now allows NAI chief Shari Redstone to make alternative offers. Apollo Global Management, Barry Diller and Edgar Bronfman Jr. are among others who have explored bids. Apollo, both on its own and in partnership with Sony Pictures, has submitted formal offers in recent months, but they have not gained much traction.

Under the terms of the Skydance deal, Redstone and her family will receive $1.75 billion, with additional funds going to Paramount to pay down debt. The transaction is expected to be the first of two parts, with a full merger between Skydance and Paramount Global to follow. NAI controls nearly 80% of Paramount’s Class A shares, or voting stock. It owns only about 10% of the equity, with that disparity adding to the complexity of deal negotiations in recent months. Skydance’s modest size relative to Paramount’s has also unsettled some investors, given the multiples associated with an eventual combination with Paramount.

Skydance has been a long-standing partner with Paramount Pictures as a co-financier of major franchises such as Mission: Impossible, Star Trek, Transformers And Top gun. Along with the 112-year-old film studio, Skydance will gain control of a portfolio that includes CBS, Nickelodeon and Paramount+. Unlike other bidders seeking to break up the company, Skydance wants to keep the entity much as it is today, though there will undoubtedly be significant cost savings. That strategic vision helps explain Redstone’s longstanding preference for Skydance over other suitors, according to sources familiar with the deal talks.

Less than a month ago, it seemed that all hope that the parties could reach a deal had evaporated. Redstone backed out of a planned deal at the last minute, citing concerns about its net proceeds and exposure to shareholder lawsuits. While previous Skydance overtures had sent Paramount’s already battered stock plummeting on shareholder dilution concerns, the most recent round has sent the stock soaring. In Hollywood and media circles, the Paramount M&A watch has marked a period of existential dread, fueling fears that another major studio was on the verge of disappearing in the wake of Fox’s absorption by Disney.

Ellison and his backers (who reportedly included his father, billionaire Oracle founder Larry Ellison) were undeterred by Redstone’s last-minute turnaround in June. Leaving the media empire her father, Sumner Redstone, built has never been an easy process. Shari Redstone, who took the reins a decade ago when Sumner Redstone’s health declined, succeeded in a signature move to bring Viacom and CBS back under the same corporate umbrella after multiple attempts. The merger of the companies into what is now Paramount Global was completed in December 2019.

The triumph of shepherding the merger proved short-lived, with Covid and myriad other difficulties piling up as two companies became one. Today, Paramount faces significant challenges on many fronts. The company, a fraction of the size of its biggest media rivals Disney and Comcast, is scrambling to turn a profit in streaming while facing secular declines in its linear TV business and a troubled moviegoing climate. While Paramount shares have rebounded on the merger news, they’re still worth less than a third of what they were when Viacom and CBS merged.

While the company has explored various M&A scenarios, it has also dropped longtime CEO Bob Bakish in favor of a tripartite Office of the CEO, made up of veteran executives George Cheeks, Chris McCarthy and Brian Robbins. During the company’s annual shareholder meeting and a subsequent town hall with employees last month, the executives outlined their strategy, which includes cutting costs (with a goal of $500 million in annual cost savings), exploring streaming partnerships, joint ventures or other options and

“While we recognize this is not a traditional management structure, we are confident it will enable them to quickly implement best practices across the company and improve performance,” Redstone said at the annual meeting.

As the Office of the CEO prepares to pass the baton (former NBCUniversal CEO Jeff Shell is waiting in the wings as part of the Skydance bid), a new round of downsizing will reshape the company’s workforce. At the end of 2023, the company had 21,900 full- and part-time employees.

“We want to take a moment to acknowledge the challenges of all the M&A speculation surrounding our company,” Robbins said during the town hall. “We know what a difficult and disruptive period it has been. And while we can’t say the noise will go away, we are here today to lay out a roadmap that can set us up for success no matter what path the company chooses to take.”

Dominic Patten contributed to this report.

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