Paramount, Skydance deal finally consummated

After near collapse, the duo finally crosses the finish line

With several false starts and a near collapse, the Paramount-Skydance deal is finally done. 

Announced Sunday evening, Paramount Global and Skydance finally agreed to merge in a two-step process: First, Skydance will purchase National Amusements – a company long held by the Redstone family for $2.4 billion and pay another $4.5 billion to acquire Paramount’s Class A and Class B stocks with hedge fund RedBird Financial investing another $1.5 billion of private capital in Paramount’s balance sheet. In the second step, Skydance will conduct an all-stock transaction to merge with Paramount valued at $475 million, and receive 317 million Class B shares at fifteen dollars each.

Several scenarios must occur before this can happen. Since Paramount owns TV stations (including WBBM-TV in Chicago), approval from regulators is necessary. Also, Paramount can still shop for a better offer for the next 45 days if they choose to, so potential suitors such as Barry Diller aren’t entirely shut out yet. If Paramount finds a better offer, the company would be subject to a $400 million breakup fee. 

The deal makes David Ellison – the son of Oracle founder Larry Ellison – one of Hollywood’s biggest power brokers. Primarily known as the producer of Paramount blockbuster 2022 movie Top Gun: Maverick, Skydance also produces animation projects, TV shows, and sports documentaries such as Hard Knocks (which features the Chicago Bears in an upcoming edition) and The Pick Is In, a documentary following four teams on NFL Draft night, including the Bears. Skydance is now the primary owner of a large TV and movie library, CBS and its related properties, a portfolio of cable networks such as MTV, Nickelodeon. and CMT, struggling paid streamer Paramount Plus, and successful FAST portal Pluto TV. 

“The key thesis behind this transaction is our desire to inject Skydance as a pure-play content company to double down on Paramount’s prowess as one of the world-class storytelling enterprises,” said Ellison Monday in a conference call about the merger, calling the company “New Paramount”. Ellison stressed the need to become a more tech-friendly company. “You’ve watched some incredibly powerful technology companies move into the … media space and do so very successfully,” he said, referring to Apple and Amazon as he noted struggling streamer Paramount Plus needs an overhaul and wants to reduce churn and increase engagement on the platform. 

Skydance also plans to use artificial intelligence, or AI, to lower costs and “turbocharge content creation capabilities”, among other things. 

The Paramount-Skydance deal almost didn’t happen. Three weeks ago, talks ended between National Amusements and Skydance as investors started to object over numerous issues. But suddenly, talks resumed between the two late last week – and they came to a merger agreement Sunday. 

Since 2019, Paramount Global lost more than $17 billion in value as the pandemic slammed it and other media companies – not to mention the continuing decline of linear TV and cord-cutting as Paramount Plus stumbled. On April 29, the company canned CEO Bob Bakish and replaced him with “The Office of the CEO’ headed by three executives. The current setup remains in place until the deal closes, but one major management change was announced Monday, appointing former NBCUniversal CEO and current RedBird exec Jeff Shell as President. Shell was forced out of

NBCUniversal after he had an inappropriate relationship with a now ex-CNBC reporter.

Skydance is planning $2 billion in cuts, more than the $500 The Office of the CEO was planning. Before Monday’s announcement, Paramount reportedly was putting BET up for sale, and considered selling CBS’ independent stations. 

The merger ends the Redstones’ control over National Amusements, whose patriarch Sumner Redstone purchased Viacom Enterprises in 1987 and beat out Diller for Paramount Communications in 1994. After being spun off from the network in 1971 due to the now-defunct fin-syn rules, Viacom reunited with CBS after 28 years apart in 1999. After splitting the company in two in 2005 as (New) Viacom and CBS Corporation respectively, both reunited as ViacomCBS in 2019 and renamed Paramount Global in 2022.