Paramount and Skydance deal

Under the tentative agreement, Skydance would pay $1.75 billion for National Amusements, which owns 77% of the voting shares of Paramount. The Paramount and Skydance deal includes a 45-day “go-shop” period, in which other bidders could submit offers as per report.

National Amusements acquisition

Others who have expressed interest in National Amusements acquisition include film producer Steven Paul, Seagram heir Edgar Bronfman Jr. and IAC’s Barry Diller.

One source with ties to a potential bidder said it was unlikely the others would abandon their efforts, in part because they may put forth bids that are more lucrative for Paramount shareholders or Redstone personally.

National Amusements has referred the Skydance deal to a special committee of Paramount’s board for review, according to two people familiar with the matter. Under the new arrangement,

National Amusements is not mandating that the Paramount merger be approved by a majority of non-Redstone shareholders, a previous sticking point, as per report.

Skydance and Paramount agreement envision

The sale is envisioned as the first part of a two-phase transaction, in which the smaller independent studio Skydance would merge with Paramount, home of the namesake film studio, CBS and cable networks such as MTV and Nickelodeon.

The century-old Paramount Pictures is known for films such as “Titanic,” “The Godfather” and the “Transformers” franchise. Skydance has co-produced Paramount movies such as “Top Gun: Maverick” and “Star Trek Into Darkness.”

Paramount declined to comment on a possible deal with Skydance, and a spokesperson for the special committee could not immediately be reached for comment.

Paramount and Skydance deal a strategic move

National Amusements re-engaged with Skydance over the past week, even as it continued conversations with other interested parties, according to one source familiar with the talks.

Redstone always saw a strategic value in the combination of Paramount and Skydance, the source said.

National Amusements owns movie theaters in the U.S., Britain and Latin America, and holds the Redstone family’s 77% of Paramount’s class A voting stock.

Rise in Paramount shares rise

The news of deal with Skydance sent Paramount shares rise up to 9% in after-hours trading. The paramount stock at closing was at $11.57.

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Skydance Media, the film and TV studio run by Ellison, has exchanged preliminary information with Paramount, said the people, who asked not to be named because the acquisition deal talks are private. Full due diligence hasn’t started, the people said.

Skydance Media deal

David Ellison’s Skydance has been working with private equity firms RedBird Capital Partners and KKR & Co. on a deal for acquisition of National Amusements, the holding company owned by Shari Redstone. It controls 77% of Paramount’s voting stock.

But that National Amusements acquisition deal is contingent on merging Skydance with Paramount. And the likely structure for a merger would be a complete takeover private of the larger media company, said the people.

Paramount Global acquisition

Redstone is considering selling as there is a shift of media landscape away from traditional TV toward streaming. While Paramount Global has run a profitable business for decades, it is smaller than Netflix, Google’s YouTube, Apple, Amazon, and other larger streamers that have bigger balance sheets to afford sports and entertainment content.

No acquisition is assured, and talks could fall apart.

It is unclear if Redstone would demand a different premium for selling National Amusements than the remaining shareholders of Paramount Global would obtain.

Skydance Media’s capital need

Skydance Media would need additional capital to acquire Paramount, which has a market capitalization of $8.2 billion and about $15 billion of debt. Some of that funding could come from Skydance’s private equity partners and Larry Ellison, the billionaire co-founder of Oracle and David Ellison’s father. Skydance Media hasn’t reached out for outside financing yet, as it hasn’t decided if it wants to move forward with a deal, said the people.

What Skydance Media wants

Skydance Media isn’t interested in a deal where there is only National Amusements acquisition but not all of Paramount Global acquisition, said the people. While such a deal would give Skydance control of Paramount. It wouldn’t solve Paramount’s problems as a publicly traded company. This includes running the growing but money-losing Paramount+ streaming service, and operating declining linear cable assets such as MTV, VH1, Comedy Central and Nickelodeon.

RedBird, Skydance, Paramount Global and National Amusements spokespeople declined to comment.

Warner Bros. Discovery interest

Warner Bros. Discovery has also had preliminary discussions about Paramount Global acquisition, according to people familiar with the matter. If Redstone sells to Skydance, one motivating factor would be fear that Warner Bros. Discovery would prefer to merge with Comcast’s NBCUniversal, one of the people said.

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