David Ellison's Skydance Media and its investment partners have raised their offer to Paramount Global board members, signaling the tech scion's strong intention to take over the storied media company.
Two people close to the discussions who were not authorized to comment confirmed the new offer but did not disclose the precise terms.
The move comes less than a month after Skydance's exclusive negotiating window expired without reaching a deal. Since then, Paramount board members have been considering a rival $26 billion bid from Sony Pictures Entertainment and Apollo Global Management, but those talks have been slow, people familiar with the matter have said.
Majority shareholder Shari Redstone has long preferred Skydance's proposal, which would give her family a premium on her voting shares. Redstone, Paramount's non-executive chairman, would like to see the New York-based media giant her father built remain whole, rather than broken up.
Some film producers and agents also support Skydance's bid, believing it represents the best opportunity to preserve one of Hollywood's oldest studios, a famous spot on Melrose Avenue. In addition to Paramount Pictures, the company owns the CBS television network, CBS television studios and cable channels including TV Land, Nickelodeon, BET and MTV.
Both sides acknowledged that previous proposals from Skydance, joined by RedBird Capital Partners and private equity firm KKR, would not be approved by shareholders, including those outside the Redstone family who own voting Class A shares. , informed people have said.
The new proposal, which came earlier this week, increases the amount of money that would go to shareholders, one of the people familiar with the matter said.
In the final days of Skydance's exclusive negotiating period, which ended May 3, Skydance and RedBird increased the financial terms of the proposal that was being considered by a special committee of Paramount's board of directors. At that time, the bidding group had offered $5 billion, which included about $2 billion to buy the Redstone family's shares.
But board members and Ellison's team disagreed over how much of the remaining $3 billion would be used to pay down debt and how much money would go to shareholders.
Redstone has the power to push through the deal he wants because his family's National Amusements Inc. owns 77% of Paramount's voting stock. However, she and her fellow board members also have a fiduciary duty to look after the interests of all shareholders.
Redstone's willingness to work exclusively with Ellison to forge a complicated two-phase transaction, which would lead to the consolidation of Ellison's smaller production company, Skydance, infuriated investors. The dispute sparked months of tensions in Paramount's boardroom and contributed to the ouster of CEO Bob Bakish, who was open to considering the Sony-Apollo deal.
Four members of Paramount's board of directors will resign next week at the company's annual shareholder meeting.
The Wall Street Journal was the first to report on Skydance's new offering.
Any deal would have to be approved by regulators.
The deal envisioned by Sony Pictures and Apollo would buy out Paramount shareholders and pay off Paramount's existing debt. Sony was expected to be the main investor and absorb the operations and franchises of Paramount's film studios. Apollo, which has stakes in television stations, was expected to claim CBS's share of the business.
But there has been little momentum in his talks with Paramount's board, people familiar with the matter said.
During a presentation to Sony investors on Wednesday night, Sony Pictures Entertainment CEO Tony Vinciquerra said the company would be disciplined in its approach to negotiating.
“We will not make investments that do not complement our current strategy,” he said. “Our strategy is to have more [intellectual property]more product, more library to sell.”
Unlike other major Hollywood studios, Sony hasn't wasted billions of dollars trying to create an independent streaming service. Instead, the Culver City studio has profited by selling its shows to other distributors and streaming services, including Netflix.
Vinciquerra made clear that there were limits to Sony's investment interests, suggesting that the company was unwilling to grow in cable TV channels, a sector of the business that has been under particular pressure in the shift to streaming.
“We're not going to get into a general entertainment streaming service,” Vinciquerra said. “We are not going to operate other businesses that are outside the strategy we have defined.”
Staff writer Samantha Masunaga contributed to this report.
