Paramount Global and Skydance strike a deal

Looking to scale up and focus on profitability, Paramount Global and Skydance Media have inked a deal to form 'New Paramount.' The deal includes a 45-day 'go-shop' period to explore other proposals and a $400 million break-up fee.

Jeff Baumgartner, Senior Editor

July 8, 2024

3 Min Read
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(Source: Vittaya Sinlapasart/Alamy Stock Photo)

Following a series of fits and starts, Paramount Global and Skydance Media have struck a deal to form "New Paramount."

Under a two-tiered transaction, the new company will acquire National Amusements, Paramount Global's controlling shareholder, and subsequently tie together Paramount Global and Skydance, David Ellison's production company.

Under the terms of the agreement, Skydance will merge with Paramount in a transaction valuing New Paramount at an enterprise value of about $28 billion. Existing Skydance investors will receive 317 million newly issued Class B shares in New Paramount, valuing Skydance at $4.75 billion based on a $15 per Paramount Class B share. Additionally, Skydance, led by the Ellison Family and RedBird Capital Partners, will invest up to $6 billion. National Amusements, meanwhile, has entered a definitive agreement to sell to Skydance for $2.4 billion.

National Amusements, which holds about 77% of the Paramount Class A shares, said it has delivered a written consent approving the transaction, noting that no further stockholder approval is required.

45-day 'go-shop' period, $400 million break-up fee

A special committee of the Paramount Global board has unanimously approved the merger. But the door is still open, as the merger agreement includes a 45-day "go-shop" period that enables the special committee to solicit and explore alternative proposals. Paramount will be on the hook to pay a break-up fee of $400 million to Skydance should it accept another offer.

The New York Times reported last week that Barry Diller, a former Paramount Pictures exec, is exploring a bid for Paramount Global. Former media mogul Edgar Bronfman Jr. and Bain Capital have reportedly shown interest in acquiring National Amusements.

If the deal goes through as planned (with an anticipated closing in the first half of 2025), New Paramount will be led by a new leadership team as the Redstone family steps away. Ellison is set to serve as chairman and CEO, and Jeff Shell, the former CEO of NBCUniversal, will become president.

The combined company will tout a sizable content library alongside Paramount intellectual property and services that include the "Star Trek" franchise, CBS, Paramount+ and Pluto TV, its free, ad-supported streaming television (FAST) service. Founded in 2010, Skydance makes feature films (including Top Gun: Maverick), television shows (including series for streaming services such as Apple TV+ and Netflix), games and sports productions.

Paramount and Skydance recently rekindled M&A talks after a temporary halt. The new deal comes together more than four years after the re-combination of CBS and Viacom.

Focus on profitability

An initial focus of New Paramount, the companies said, will be to "stabilize and strengthen" Paramount with an emphasis on profitability, which has become a major focus in the streaming world. Another aim is to create more scale in a streaming sector that also includes behemoths such as Netflix, Amazon and Warner Bros. Discovery.

"This is a defining and transformative time for our industry and the storytellers, content creators and financial stakeholders who are invested in the Paramount legacy and the longevity of the entertainment economy," Ellison said in a statement.

"It's a new Paramount, it's not just a catchphrase," Shell reportedly said today on a call with investors. "We think it's going to be a new day for these combined assets."

Update: That push for profitability is also being paired with at least $2 billion in cost cuts that Skydance has identified. Such cuts can be made "quickly," Shell said, but didn't elaborate how cutbacks will be distributed and how they might impact Paramount's declining linear TV business.

Shares in Paramount Global were down 44 cents (-3.68%) to $11.38 each in Monday morning trading.

About the Author(s)

Jeff Baumgartner

Senior Editor, Light Reading

Jeff Baumgartner is a Senior Editor for Light Reading and is responsible for the day-to-day news coverage and analysis of the cable and video sectors. Follow him on X and LinkedIn.

Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.

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