Skydance Media and Shari Redstone’s National Amusements Inc. have quietly renewed acquisition talks and have reached a tentative agreement to acquire Paramount Global. That deal will now be reviewed by Paramount Global’s special committee of its board of directors, which has steered the media giant through its roller coaster ride of M&A activity and speculation since late last year. The new pact with David Ellison’s Skydance Media and Gerry Cardinale’s RedBird Capital is believed to include a 45-day period in which Paramount and NAI, which owns Redstone’s controlling share in Paramount, have the right to shop around for a bidder to match the Skydance terms.
National Amusements abruptly ended months of talks with Skydance on June 11, saying it had concerns about the company and its partners' ability to close the proposed $6 billion transaction. It’s not immediately clear if the economic terms of the new agreement have changed markedly from the pact that fell apart last month.
A source close to the situation said Skydance still balked at National Amusements’ request that the company’s noncontrolling shareholders get a chance to vote on the deal. The hope was that approval by a majority of ordinary shareholders would help indemnify Redstone from inevitable shareholder lawsuits. Redstone owns some 77% of voting shares in Paramount. Common shareholders were quick to publicly criticize the terms of the Skydance deal as they steadily leaked out via media in April and May.
Paramount Global shares have been hammered for the year, dropping 28%. On Tuesday, however, the stock shot up nearly 6% during regular trading and hopped another 8% in after-hours activity on the heels of the Skydance headlines and the BET Networks sale chatter.
The 45-day window for Paramount and NAI to seek a superior bid may be an artful solution to the impasse over Redstone’s push for an expected shareholder vote. From Skydance’s perspective, the reason for engaging with NAI in its pursuit of Paramount was to take advantage of Redstone’s NAI's iron-clad control of the company. However, from Redstone’s view, the Skydance deal was likely to be bound up in costly litigation for months while the company would likely struggle amid the uncertainty. Representatives for Paramount Global, NAI, and Skydance declined to comment.
The surprise of the return of Skydance to the mix capped a busy 24 hours of rumors about the possible fate of Paramount Global and its assets. Late Monday, word surfaced that Barry Diller’s IAC was mulling a run at National Amusements to get ahold of Paramount. That rumor brought a historical perspective to the frenzy around the studio as Diller, who formerly ran Paramount and 20th Century Fox and launched the Fox Broadcast network, previously fought hard against Redstone’s father, the late Sumner Redstone, for the prize of owning Paramount in 1993 and 1994.
Also, on Tuesday, rumors surfaced about an investor group looking to acquire Paramount’s BET Networks unit for $1.6 billion in a buyout deal led by former BET executive Scott Mills. On Monday, Variety confirmed a CNBC report that Warner Bros. Discovery is in active talks with Paramount Global about a sale or partnership between WBD’s streaming platform Max and the Paramount+ streamer. WBD and Paramount Global have taken multi-billion hits from losses incurred to build up Max and Paramount+ with content, subscribers, and marketing. The hope is that both services add scale and compelling content to make the enlarged platform a stronger contender against Netflix, Amazon Prime Video, Disney+, and Hulu.
Paramount Global has struggled in the face of sector-wide headwinds. The studio conglomerate’s valuation has fallen by more than half over the past five years. But it’s still a collection of unique media assets that have value — although the emerging bidders are looking to nab a bargain at a time when heavy streaming losses and structural changes in its core cable and broadcast businesses have put enormous pressure on the company.
If it comes to fruition, the 45-day window to play the field with other suitors was likely crafted as an alternative to a common shareholders vote but something that would generate the same result. NAI and Paramount Global board members could reasonably say they considered all options for maximizing the value paid to common shareholders.
The end of the Skydance talks led to a burst of internal optimism that they might be spared the tumult of an ownership transition. In late April, after Paramount Global CEO Bob Bakish was forced out, the board appointed a three-person Office of the CEO led by Chris McCarthy, head of Showtime/Paramount Networks and MTV Studios; George Cheeks, CEO of CBS; and Brian Robbins, CEO of Paramount Pictures and Nickelodeon. The trio has been busy outlining cost cuts, asset sales, and strategic shifts to get the company back on firmer ground.
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