Film producer David Ellison's Skydance Media is exploring an all-cash deal to acquire National Amusements Inc., the company that controls Paramount Global, as part of a bid to merge the two entertainment businesses, according to people familiar with the matter. They were not authorized. comment.
Discussions are in their early stages and may not result in an agreement.
Skydance would be willing to buy a majority stake in Shari Redstone's National Amusements only if such a deal would lead to Skydance merging with Paramount, one of the people said. Billionaire Larry Ellison, father of Skydance CEO David Ellison and founder of Oracle Corp., would be involved in financing such a deal.
Representatives for Skydance, Redstone and Paramount declined to comment.
Skydance has long collaborated with Paramount Pictures, having co-produced every film in the “Mission: Impossible” franchise since 2011’s “Mission: Impossible – Ghost Protocol,” as well as “Top Gun: Maverick,” starring Tom Cruise. If the deal goes through, Ellison and Skydance would take over National Amusements and Paramount Global from the Redstone family, which has held a majority stake in various versions of the company since 1987.
Among the key challenges is the task of structuring a deal that is acceptable to Redstone, including dealing with the tax consequences of an all-cash deal that Ellison is seeking.
There's also the question of whether Redstone would be willing to split up the media company to make a more palatable deal for Skydance. Although a deal depends primarily on the inclusion of Paramount's studio operations, as one of the people said, Paramount also owns the CBS broadcast network and a large portfolio of cable television channels, including Nickelodeon, Comedy Central, MTV, VH1 and Paramount Television.
Paramount's major franchises include the “Transformers” movies, Comedy Central's “South Park,” Nickelodeon's “SpongeBob SquarePants,” the “Paw Patrol” movies, and Taylor Sheridan's “Yellowstone” and their various offshoots. It also owns the Paramount+ streaming service.
Paramount's dual class structure also complicates any deal scenario involving investors who own publicly traded shares. They would demand a premium for their shares, raising the stakes for Skydance.
Redstone controls his family's holding company, Massachusetts-based National Amusements Inc., which owns about 77% of Paramount's voting stock. NAI is a private company and also operates a chain of movie theaters, with locations primarily in the Northeast.
Over the years, the Redstone family has attracted interest in their media holdings.
However, Shari Redstone was initially interested in building her late father Sumner Redstone's company, rather than getting paid. After merging CBS with Viacom four years ago, creating what was then a $30 billion entity, Redstone became the non-executive chairwoman of the combined entity. The company was renamed Paramount Global in early 2022.
By then, the company's stock had peaked in early 2021 at over $64 per share. It has faded amid Wall Street's gloomy view of traditional media stocks. The stock has traded at about $15 per share since May, putting the company's value at about $10 billion.
The company has lost two-thirds of its value at a time when it was spending heavily to build the Paramount+ streaming service to compete with Amazon, Apple, Netflix and Disney to be a streaming contender.
With Paramount's balance sheet strained and its television assets losing audiences, Shari Redstone has considered exiting the business her father controlled for more than 30 years. In November, Paramount instituted a change of control provision to protect current top executives should a new owner take over, according to Securities and Exchange Commission filings, signaling the imminence of a potential acquisition. .
David Ellison's interest in Paramount was previously reported in December by Puck News. The Wall Street Journal first reported details about Ellison's potential cash deal for National Amusements on Wednesday.
In 2022, Skydance secured a $400 million private equity investment led by KKR, valuing the company at $4 billion.
Skydance is not the only suitor. Last month, Paramount CEO Bob Bakish met with Warner Bros. Discovery executive David Zaslav, who would use the opportunity to strengthen his company. Paramount would bring obvious synergies, such as combining CNN with CBS News.
But Warner Bros. Discovery is in a similar situation to Paramount, struggling to compete against technology companies in a difficult environment. WBD has also been struggling to control its more than $40 billion in debt stemming from its deal with AT&T to take over assets such as Warner Bros., HBO and the Turner networks.
