The Skydance deal is a turning point for the Redstone family, whose fortunes have been intertwined with the rise and fall of the traditional entertainment industry during the decades of its tumultuous ownership of Paramount and its predecessors. Ms. Redstone, Paramount’s board chair, is cashing in much of her ownership in the company she fought to preserve and control.

Paramount and Skydance merger

As per report, Paramount Global’s full board and Redstone have approved the complicated three-way merger transaction. The deal will take Paramount, CBS and the former Viacom assets out of the hands of the Redstone family for the first time in decades.

The revised merger terms still faces a complicated process of regulatory approvals in part because the deal involves Paramount Global’s television stations, which trigger the involvement of the FCC.

Paramount Global’s revised merger terms

The special committee of Paramount Global’s board of directors tasked with reviewing M&A options has agreed to revised terms for a merger with Skydance. The pact will now be reviewed by the full board of the parent company of Paramount Pictures, CBS, Nickelodeon, Paramount+, Showtime, MTV and more. Skydance and Paramount are expected to announce the agreement early Monday before the markets open, if not late tonight.

Paramount and Skydance deal

As part of the deal, Paramount Global will have the right to shop around for matching or superior offers for a 45-day period before completing the deal with Skydance. Although Paramount has been seen as on the block for years, that ticking clock is likely to bring out opportunistic contenders. Already, media adjacent-moguls including Barry Diller and Edgar Bronfman Jr. have indicated interest in a deal to buy out National Amusements.

Earlier deal broken by National Amusements

Paramount and Skydance were close to tying the knot this time last month when National Amusements abruptly broke off talks, citing concerns the company would not be able to close the deal. Skydance’s effort is backed by Gerry Cardinale’s RedBird Capital, among other equity players.

Representatives for Paramount Global, the board’s special committee and Redstone’s National Amusements Inc. holding company did not respond to requests for comment Sunday. A representative for Skydance Media declined to comment.

Paramount’s market capitalization

Paramount’s market capitalization that is the value the stock market places on the company is around $8.2 billion. Skydance’s last disclosed its valuation was around $4 billion.

A tender offer from Skydance will allow many holders of Paramount’s nonvoting stock to cash out at roughly $15 per share. Investors who own voting stock will be able to sell at $23 per share. This will allow investors who feel shortchanged by the Skydance deal to get rid of the company’s stock at a premium to its current price of $11.81.

Skydance cost cutting

Another pillar of Skydance’s plans for Paramount is cost cutting. The company plans to consolidate some international operations, boosting profits partly by laying off employees. That won’t earn Mr. Ellison many fans among the company’s rank-and-file, though it could help him please shareholders.

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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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