Done Deal: Paramount Global Sells to Skydance Media in $8 Billion Acquisition

The "Mission: Impossible" and "Top Gun: Maverick" coproducer will acquire controlling shareholder Shari Redstone's National Amusements under the two-step deal

The post Done Deal: Paramount Global Sells to Skydance Media in $8 Billion Acquisition appeared first on TheWrap.

Paramount Global has sold to Skydance Media in an $8 billion deal that merges David Ellison’s company with the legacy Hollywood studio after acquiring controlling shareholder Shari Redstone’s National Amusements Inc., the companies announced on Sunday.

The two-step deal that took months of negotiations marks the end of the Redstone family’s ownership of the historic entertainment conglomerate, which includes not only Paramount Studios but Paramount+, CBS, MTV, Nickelodeon and Pluto.

Shari Redstone said in a statement: “Given the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king. Our hope is that the Skydance transaction will enable Paramount’s continued success in this rapidly changing environment.”

The deal, backed by RedBird Capital and the Ellison family, provides a total of $8 billion for the deal in cash and stock including $2.4 billion for NAI, $4.5 billion to non-NAI shareholders in Paramount and an additional $1.5 billion in new capital. 

The deal names Ellison as Chairman and Chief Executive Officer, and former NBCUniversal CEO Jeff Shell as President. The deal is expected to close in the first half of 2025.

The top deal points are as follows:

• Skydance is being valued at $4.75 billion; Skydance equity holders will receive 317 million Class B Shares valued at $15 per share
• Post transaction close, Skydance Investor Group will own 100% of New Paramount Class A Shares and 69% of outstanding Class B shares, or approximately 70% of the pro forma shares outstanding.
• Paramount shareholders will receive in this deal a 48% premium to the price of the Class B stock as of July 1, 2024. Class A shares receive a 28% premium.

In a statement, Ellison said: “I am incredibly grateful to Shari Redstone and her family who have agreed to entrust us with the opportunity to lead Paramount. We are committed to energizing the business and bolstering Paramount with contemporary technology, new leadership and a creative discipline that aims to enrich generations to come.”

Under the terms of the deal, Skydance will pay Redstone $1.75 billion to acquire National Amusements, which controls 77% of Paramount’s class A voting stock. The deal also includes a 45-day go-shop provision that gives other bidders the opportunity to make a better offer. The deal will not be subject to a shareholder vote.

Others who expressed interest in acquiring Paramount included IAC chairman Barry Diller, “Baby Geniuses” producer Steven Paul, former Warner Music Group CEO and chairman Edgar Bronfman Jr, Sony Pictures Entertainment and Apollo Global Management — who submitted a $26 billion all cash offer in May — and Allen Media Group founder Byron Allen, who placed a $30 billion bid including debt. Warner Bros. Discovery CEO David Zaslav also met with former Paramount CEO Bob Bakish about a potential merger in December, though those talks were later halted.

The deal concludes a months-long saga that began in December, when Skydance began kicking the tires on the media conglomerate’s portfolio. The two parties entered into an exclusive 30-day negotiating window in April to conduct due diligence. While that window expired without a deal, the two sides continued to negotiate.

Some of Paramount’s class B shareholders had expressed opposition to the Skydance bid, which they argued prioritized Redstone over the rest of the company’s investors. In addition to some investors who threatened to sue, the Employees’ Retirement System of Rhode Island requested that the Delaware Court of Chancery order Paramount’s board and management to turn over various documents related to the merger talks with Skydance. To assuage investors’ concerns, Skydance revised the offer multiple times in an effort to sweeten the deal for minority shareholders.

While both Skydance and National Amusements agreed to the economic terms of a deal, there were outstanding issues they did not agree on — most notably, giving all shareholders a consent vote on the sale and legal protection in the event of shareholder lawsuits, which prompted Redstone to scrap talks last month.

But in a surprise move, an individual familiar with the matter told TheWrap on Tuesday that the two sides had reached a tentative agreement, which was being referred to the Paramount board’s independent special committee evaluating bids. Four members of the board — including three who were on that committee — stepped down from their roles at Paramount’s annual meeting in June. On Sunday, the Paramount board of directors’ independent special committee unanimously approved the latest deal.

The agreement comes as Paramount is currently being run by its new co-CEOs Brian Robbins, George Cheeks and Chris McCarthy, who replaced Bakish in April. The trio unveiled a long-term strategy last month designed to reduce its $14.6 billion in long-term debt, accelerate streaming profitability, return to investment-grade credit metrics after a downgrade to junk status and drive revenue and earnings growth. That plan includes streaming partnerships, divesting assets and $500 million in cost cuts in areas that include legal and corporate marketing.

At an employee town hall last week, the executives said they’ve hired bankers to help with asset sales. Earlier Tuesday of last week, Paramount shares rose on a Bloomberg report that a group including BET CEO Scott Mills and CC Capital founder and senior managing director Chinh Chu are considering offering up to $1.7 billion to acquire BET. Other possible assets on the auction block could include Pluto TV and the famed Paramount lot, which would be leased back for the studio’s use, four individuals familiar with the matter previously told TheWrap.

Robbins, McCarthy and Cheeks are also advancing talks with potential partners in international markets that will “significantly transform the scale and economics” of its streaming business, which is currently on track to reach domestic profitability in 2025. The Office of the CEO said they could team up with other streamers or technology platforms on a joint venture or long-term partnership. CNBC reported on Monday that Warner Bros. Discovery is interested in a potential merger of Max and Paramount+.

In 1987, Shari’s father Sumner Redstone acquired Paramount’s predecessor Viacom for $3.4 billion. Viacom won a bidding war for Paramount Communications for about $10 billion in 1994 and acquired CBS Corp. for $35 billion in 1999.

In 2005, Sumner announced that Viacom and CBS would be split into two separate entities. But that move wasn’t to last as Shari — who had taken over National Amusements after Sumner stepped down in 2016 — recombined the companies in 2019 to form ViacomCBS, later renamed Paramount Global.

Paramount, which reported a market capitalization of $8.23 billion as of Friday’s close, has seen its stock price fall 19% in the past six months, 27% in the past year and 77% in the past five years. Paramount and Skydance will hold a conference call with investors to discuss the transaction at 8:30 a.m. ET on Monday.

The post Done Deal: Paramount Global Sells to Skydance Media in $8 Billion Acquisition appeared first on TheWrap.