Skydance Media is accusing Paramount Global of opening a new tab on a special committee of directors of breaching the terms of its deal by extending the period when it can engage with other bidders, the Wall Street Journal reported. This comes after veteran media executive Edgar Bronfman sweetened his bid to take over Paramount, offering $6 billion for its controlling shareholder National Amusements and a minority stake in Paramount.
Bronfman's competing offer threatens to undo a planned acquisition by tech scion David Ellison and his independent studio Skydance Media. Shares of Paramount, the home of Paramount Pictures, the CBS broadcast network, and cable networks such as MTV, were down 1.5% in extended trading. "While Skydance is not currently exercising its right to terminate the transaction agreement, we reserve the right to do so in the future," the report quoted Skydance's attorneys as saying in a letter. According to knowledgeable people, Bronfman’s bid isn’t expected to derail the Skydance deal. But there are risks to Paramount’s late-in-the-game flirtation with another suitor.
Paramount said on Wednesday that the special board committee extended the Aug. 21 "go-shop" period deadline for Bronfman's consortium until Sept. 5. If Paramount, controlled by Shari Redstone's family business, accepts an offer that Skydance does not match, the media conglomerate would have to pay a $400 million break-up fee.
Several sources speculated that Paramount’s board’s willingness to entertain Bronfman’s proposal stems from Redstone’s desire to protect her family from costly shareholder lawsuits. The sales process already has sparked litigation, and the Paramount directors’ efforts to beat the bushes could help demonstrate that there weren’t viable bidders beyond Skydance, helping them defend against shareholder actions. The Skydance group has deep pockets, including tech titan Larry Ellison, co-founder of Oracle Corp., and RedBird Capital Media, a decade-old firm founded by former Goldman Sachs partner Gerry Cardinale. Paramount may also be angling for additional concessions from the Skydance group.