Monday, July 8, 2024

Done Deal: Paramount Global, Skydance Agree to Merger

Paramount Global agreed to merge with David Ellison’s Skydance Media in a complicated deal that ends the Redstone family’s involvement with the Hollywood company.

The Wall Street Journal reports Shari Redstone is selling her family’s controlling stake in Paramount Global and merging the entertainment giant with Skydance Media, drawing to a close a nearly four-decade run by her and her father as entertainment power players. 

Skydance and its investors have agreed to spend more than $8 billion to acquire National Amusements, the family company that controls Paramount, and invest in the new iteration of the iconic company. The deal gives the beleaguered entertainment giant an injection of cash at a time when the traditional media landscape is in decline.

The deal, announced Sunday night, comes after a special committee of Paramount Global directors agreed to the merger with Skydance. On Tuesday, the Redstones had agreed in principle to sell National Amusements, weeks after turning down a similar deal with Skydance, shocking many on Hollywood and Wall Street.

The merger will marry Paramount—which owns the iconic movie studio behind “The Godfather,” broadcaster CBS and cable networks including Nickelodeon, Comedy Central and MTV—with Skydance, a production company run by the son of Oracle co-founder Larry Ellison. Skydance also owns an animation studio and a gaming division, and has a joint venture with the National Football League.

Skydance said it plans to improve and “reinvigorate marquee Paramount and CBS brands,” while improving profitability and bolstering investment in digital platforms. It aims to improve the technology behind streaming platforms Paramount+ and Pluto and bolster the company’s cable channels.

Under the agreement, Skydance will buy National Amusements in a deal with an equity value of $1.75 billion. Skydance then plans to merge with Paramount.

The merger is expected to take months to close as regulators review the deal.

Axios reports Redstone, who for years resisted merger interest, is striking this deal when Paramount is under massive pressure.Its market value was $8.3 billion as of Sunday evening, down from nearly $60 billion at the height of the COVID-19 pandemic, while its debt rating was cut to junk by S&P in late March.

While Paramount+ has grown its subscriber base to 71 million globally, it's still well behind streaming leaders like Netflix and Disney and it loses hundreds of millions of dollars each quarter. Moreover, the industry-wide pivot to streaming has hurt Paramount's legacy cable business.

"Given the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king," Redstone said in a statement. "Our hope is that the Skydance transaction will enable Paramount's continued success in this rapidly changing environment."

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