Monday, April 29, 2024, Paramount Studios, Los Angeles, California, USA.
Eric Thayer | Bloomberg | Getty Images
Paramount Worldwide Agreeing to merge with Skydance ends months of negotiations in a deal that would see the Redstone family relinquish control of the storied film studio and media company.
Paramount’s special committee signed the merger agreement on Sunday, days after Paramount controlling shareholder Sally Redstone’s National Entertainment struck again with Skydance, the production company best known for “Top Gun: Maverick.” Preliminary Agreement. A similar deal was halted a few weeks ago.
In the latest deal, a buyout consortium including private equity firms RedBird Capital Partners and KKR will invest more than $8 billion in Paramount and acquire National Amusements. The deal gives National Amusements an enterprise value of $2.4 billion, including $1.75 billion in equity.
Paramount’s Class A shareholders will receive $23 per share in cash or stock, while Class B shareholders will receive $15 per share, equivalent to a total of $4.5 billion in cash consideration available to public shareholders. As part of the deal, Skydance will also inject $1.5 billion of capital into Paramount’s balance sheet.
“This is a new Paramount; it’s not just a slogan,” RedBird’s Jeff Shell, the former CEO of NBCUniversal, said on a conference call with investors on Monday. “We think this will be a new day for these combined assets.”
Skydance founder David Ellison will serve as CEO of the combined company, while Shell will serve as president.
The merger is subject to regulatory approval and is expected to close in the third quarter of 2025.
The completion of the Skydance merger would mark a major shift in ownership for Paramount and Hollywood as a whole.
The Redstone family has long controlled the film studio – known for films such as “The Godfather,” “Top Gun” and “Forrest Gump” – as well as the CBS broadcast network and cable networks including MTV and Nickelodeon .
Now, Ellison, 41, the son of billionaire Oracle founder Larry Ellison, is poised to head a major movie studio and join Hollywood’s elite.
“It’s been a long time since there’s been a creative executive running a major Hollywood company,” Shell said on a conference call Monday. “I think that’s really important when creativity is at the core.”
Paramount’s business and stock have been on a rollercoaster ride, especially over the last year, as the traditional media giant faced a weak ad market and continued loss of cable TV customers. Its flagship streaming platform, Paramount+, has yet to turn a profit.
Paramount shares fell about 5% on Monday.
“The new Paramount”
Tom Cruise attends the London premiere of Top Gun: Maverick.
Jiawei Tang | Wire Image | Getty Images
The merger marks the end of a decades-long run by the Redstone family, which split the company between CBS and Viacom.
“As you know, my father founded Viacom and CBS by bringing together the best assets in media, news and entertainment,” Redstone said in a memo to employees Sunday night. “While people often debate content versus distribution, all of my father’s decisions were governed by the belief that content was truly king.”
On Monday, RedBird and Skydance executives pointed to the synergies between Skydance and Paramount, specifically highlighting the success of CBS and the company’s partnership with the National Football League. They talked about Paramount’s vision for the future, which includes a focus on growing Paramount Pictures’ movies, CBS and sports and extracting as much value as possible from the declining traditional television business.
“The key thesis behind this transaction is that we want to inject Skydance as a pure-play content company to enhance Paramount’s position as one of the world’s best storytelling businesses,” Ellison said on Monday’s conference call.
Ellison also set out the goal of establishing Paramount as a “hybrid technology capable of meeting evolving market needs.”
Shell and other companies note the decline in the traditional TV business but say they believe it will remain a long-term, cash-generating business.
long and winding road
ViacomCBS Chairman Shari Redstone attends the morning session of Allen & Company’s Sun Valley Annual Media Conference in Sun Valley, Idaho, USA on July 7, 2021 .
Brian Losnes | Reuters
The agreement marks the end of a lengthy sale process for Redstone and Paramount.
Late last year, Paramount began transaction discussions with interested buyers, including: then, Warner Bros. Discovery. In addition to industry headwinds, Paramount is saddled with a massive debt load of nearly $15 billion, making the economics of the deal tricky.
In early January, a Paramount special committee was formed and began evaluating strategic alternatives, including selling the company.
skydance and paramount getting closer little by little The deal was struck in recent months, during which time Bob Bakish Step down CEO of Paramount and was replaced by three company leaders.
those parties, those parties Agree first It wasn’t until early June that we saw the terms of the deal. stopped By Redstone a week later.
Soon after, Paramount’s newly appointed “Office of the Executive Officers” – CBS CEO George Cheeks, Paramount Media Networks CEO Chris McCarthy and Paramount Pictures CEO Bu… Ryan Robbins – began their work. plan Restructure the company by reducing debt Discover Streaming joint venture partner.
Paramount’s current leadership will run the company until the deal closes, and Paramount said in a memo to employees Sunday night that until then it will be “business as usual” and said they will still carry out the planned layoffs. and cost reductions, and will continue to explore opportunities such as collaborations and divestments.
The Skydance-led consortium echoed its support for the strategies on Monday and said it had built cost-cutting measures into its business model. Executives also said that the current management is considering selling some assets and Skydance will provide support at the right price.
Given the mixed interest in Paramount in recent weeks, there may already be a pool of bidders.
media mogul barry diler Recently expressed interest in ParamountFormer media executive Edgar Bronfman Jr. reportedly did the same. According to CNBC, Sony Pictures and private equity firm Apollo Global Management have expressed interest in acquiring report.
The agreement between National Amusements and Skydance allows other potential bidders to make offers within 45 days. If Paramount’s special committee chooses a different offer, the Skydance-led consortium will receive a $400 million breakup fee.
Upon completion of the transaction, Skydance will wholly own Paramount’s Class A shares and 69% of the outstanding Class B shares.
The merger values Skydance at $4.75 billion, and its shareholders are expected to receive 317 million Class B shares, valued at $15 each.
Revealed: Comcast-owned NBCUniversal is the parent company of CNBC.
