A storied film studio and television network are poised for a generational changing of the guard that could dramatically transform the entertainment business.
Shari Redstone and her family on Tuesday accepted a $2.4 billion buyout proposal from technology entrepreneur David Ellison for his investment firm, National Amusements Inc., commonly known as NAI, which owns the controlling stake in embattled media company Paramount Global.
The Redstone family submitted the offer from Ellison-owned Skydance Media to the special committee of Paramount's board, which must now accept or reject it. The struggling media giant owns CBS, the Paramount Pictures movie studio and the cable channels MTV, Nickelodeon and Comedy Central.
On Wednesday, Paramount board members began evaluating the offer, a version of which they came close to approving three weeks ago before Redstone chickened out and called off talks. Now the question looms over the company: Is the deal for real this time, and what will happen once it closes?
“This is feeling a lot like Groundhog Day,” analyst Jamie Lumley of research firm Third Bridge said in an emailed statement. “Renewed hope that both sides can reach a deal is tempered by concerns that we’ve been through this before and it’s unclear whether all the outstanding issues have been addressed.”
The prize finally appears within reach for Ellison, the 41-year-old son of billionaire Oracle Corp. co-founder Larry Ellison. The breakthrough came this week after months of high drama, including tumultuous backroom negotiations, boardroom conflicts and two dramatic about-faces by Redstone.
Redstone abruptly called off the deal with Ellison on June 11, just as it seemed the deal was close to being finalized. Her about-face surprised industry observers (and Paramount insiders) because she had been the loudest supporter of Ellison’s offer, even brushing aside detractors of the deal who had stood in the way, including ousted former Paramount CEO Bob Bakish.
After Redstone walked away from the talks, Ellison and his bidding partners spent about a week regrouping. Ellison then contacted Redstone to try again, according to two people familiar with the matter who are not authorized to discuss the internal process.
Ellison and his backers RedBird Capital Partners, private equity firm KKR and Larry Ellison agreed to add more incentives, including another $50 million earmarked for the Redstones’ NAI, in an attempt to restore confidence and get deal negotiations back on track, according to three people familiar with the process.
In total, the deal between Skydance and Paramount is valued at around $8.4 billion.
The sale of National Amusements would net the Redstone family $1.75 billion, once the company’s debts are paid off. In addition, Skydance and its financial partners have agreed to contribute $1.5 billion in cash to help Paramount pay down some of its debt and improve its balance sheet. Those payments would be made once the deal closes, people familiar with the matter said.
The deal would also set aside $4.5 billion to buy shares owned by Paramount's Class B, or non-voting, investors who might be eager to exit.
Wall Street cheered the new turnaround on Wednesday, sending Paramount shares up nearly 7 percent to $11.46.
As part of the transaction, David Ellison intends to merge Skydance, the 14-year-old privately held Santa Monica film, television and gaming company behind Paramount’s blockbuster “Top Gun: Maverick,” with Paramount.
The next step is for Paramount's board of directors to approve the deal. The deal would also require the consent of federal regulators. That process would take months.
Momentum has been building in recent days as both sides look to close a deal before next week's annual conference of media moguls in Sun Valley, Idaho, which draws heavyweights including Walt Disney Co. Chief Executive Bob Iger, Amazon Chief Executive Andy Jassy and founder Jeff Bezos, news baron Rupert Murdoch and Redstone.
Skydance Group also agreed to strengthen provisions to try to protect the Redstone family from shareholder lawsuits related to the deal, people briefed said. Some nonvoting shareholders have long opposed Ellison’s proposal, saying it benefited the Redstone family at the expense of ordinary investors.
Disputes over compensation proposals proved tense in the days before the deal collapsed in early June.
At one point, Redstone looked into allowing common shareholders to weigh in through a nonbinding vote, but that was not possible for Skydance and RedBird. In the end, both sides agreed to a 45-day period to “evaluate the offers,” which allowed Paramount to submit other offers.
It’s unclear whether there are any others interested in buying Paramount outright, largely because of the severe challenges facing the cable programming business. The company’s cable channels, once industry leaders, have seen their audiences flee in the transition to streaming and abundant on-demand offerings, including those from Netflix and Hulu.
Apollo Global Management and Sony Pictures Entertainment had expressed interest in acquiring parts of Paramount. Sony wanted the Paramount Pictures studio and its rich catalog, which includes the “Mission: Impossible” and “Top Gun” franchises. Warner Bros. Discovery was largely interested in buying CBS in an attempt to strengthen its television portfolio, which included TNT and CNN.
But even under Ellison, the company may have to consider divesting certain assets, analysts say. For example, Paramount has reportedly restarted the process of potentially selling BET.
“I think what we can expect is a stabilization of their balance sheet,” said Laurent Yoon, a senior analyst at Bernstein. “If they manage to stabilize the balance sheet, it helps them invest in growth. But even if they invest in growth, they won’t see the fruits of that in the short term. It will take time.”
Other potential buyers for National Amusements have emerged in recent months, complicating Redstone's decision.
She has overseen the family empire since her father, Sumner Redstone, began struggling with health issues eight years ago. He died in 2020.
The other suitors — former Seagram and Warner Music chief executive Edgar Bronfman Jr. and Hollywood producer Steven Paul (“Ghost in the Shell,” “Baby Geniuses”) — had separately proposed paying the family more than $1.75 billion.
The challenges of a rapidly changing industry prompted Redstone to part with her cherished family legacy. People close to the mogul say the decision was difficult. Her family has always been proud owners of Paramount, formerly known as Viacom.
Redstone’s adult children, who stand to inherit the family fortune, had initially advocated for the Skydance deal, according to two people familiar with the matter but not authorized to speak publicly.
In addition to the family's holdings in Paramount, National Amusements includes a regional movie theater chain founded by Sumner Redstone's father, Mickey, a former linoleum flooring salesman, during the Great Depression.
Times staff writer Samantha Masunaga contributed to this report.
