Paramount agrees to merge with Skydance, anointing new Hollywood mogul

NEW YORK – Skydance Media and Paramount Global have agreed to merge, the companies announced late on July 7, opening a new chapter for one of Hollywood’s oldest studios.

Ms Shari Redstone, Paramount’s non-executive chair, will sell her family’s controlling stake in the company in a complex transaction that will culminate in a merger.

The deal represents the end of an era for the Redstones, whose late patriarch, Mr Sumner Redstone, transformed the family’s chain of drive-in movie theatres into a media empire that included Paramount Pictures, the CBS broadcast network and cable television networks Comedy Central, Nickel­odeon and MTV.

The merger will combine Paramount, home of classic films such as Chinatown, The Godfather and Breakfast At Tiffany’s, with its financial partner on several major recent films, including Top Gun: Maverick, Mission: Impossible – Dead Reckoning and Star Trek Into Darkness.

The deal will elevate Skydance founder David Ellison, the 41-year-old son of Oracle founder Larry Ellison, to the position of Hollywood’s newest power broker. He stands to inherit a media company that has a mountain of challenges, as it navigates an entertainment business upended by the streaming video revolution.

Paramount has shed nearly US$17 billion (S$22.9 billion) in value since late 2019, as its traditional television business has eroded faster than its Paramount+ streaming service can turn a profit.

There has been tension in the executive suites. Its chief executive, Mr Bob Bakish, was ousted in April after clashing with the company’s controlling shareholder, Ms Redstone, over the Skydance deal. He was replaced by a trio of executives who occupy the “office of the CEO”, a group that has proposed making US$500 million in cuts, selling off certain assets and exploring a possible joint venture partner for Paramount+.

These plans, which would mean more layoffs at a company that has already undergone a wave of job cuts, may now be in question.

Mr David Ellison will likely be joined at Paramount by veteran media executive Jeff Shell, former CEO of NBCUniversal, once the deal closes, according to two people familiar with the discussions. Mr Shell left NBCUniversal in 2023 after an investigation into an inappropriate relationship and subsequently joined private equity firm RedBird Capital Partners as its chair of sports and media.

The Paramount-Skydance deal is the culmination of months of talks that appeared to have derailed when Ms Redstone abruptly called off negotiations on June 11.

Other prospective bidders for National Amusements, a firm that holds the Redstones’ voting shares in Paramount, emerged: independent Hollywood producer Steven Paul, Seagram heir Edgar Bronfman Jr, who is backed by private equity firm Bain Capital, and IAC chair Barry Diller.

Meanwhile, discussions between Mr Ellison and Ms Redstone quietly resumed, and became more constructive, according to two people familiar with those discussions.

Skydance sweetened the Redstone family’s payout for the sale of National Amusements to US$1.75 billion, said one of the sources familiar with deal terms. It also enhanced legal protections from possible shareholder lawsuits, clearing the way for a new agreement, the source said.

Mr Ellison and his financial backers, including Redbird Capital Partners, also took steps to bolster Paramount’s balance sheets, promising an injection of US$1.5 billion, the source told Reuters. They also offered to buy about 50 per cent of Paramount’s non-voting shares for US$15 a share, the source said.

Holders of Class A voting stock would receive US$23 a share, according to another source.

The deal also gives Paramount 45 days to find a better offer, leaving open the possibility of yet another plot twist in an already chaotic deal process. REUTERS