In a shocking holiday week, Skydance Media and National Amusements Inc. of Shari Redstone have quietly renewed acquisition talks and reached a tentative deal to buy Paramount Global.
That deal will now be reviewed by a special committee of Paramount Global’s board of directors, which has steered the media giant through its M&A activity and speculation since late last year. The new pact with David Ellison’s Skydance Media and Gerry Cardinale’s RedBird Capital is believed to include a 45-day period in which Paramount and NAI, which owns Redstone’s controlling stake in Paramount, have the right to shop for a bidder that complies with the terms of Skydance. .
News of the renewed talks was first reported Tuesday by the New York Times and the Wall Street Journal.
RELATED CONTENT: What went wrong: Inside Paramount’s failed merger talks with Skydance Media
National Amusements abruptly ended months-long talks with Skydance on June 11, saying it had concerns about the company and its partners’ ability to close the proposed $6 billion transaction. It is not immediately clear whether the economic terms of the new deal have changed significantly from the pact that fell apart last month.
A source close to the situation said Skydance still opposed National Amusements’ request that the company’s non-controlling shareholders have a chance to vote on the deal. The hope was that approval by a majority of common shareholders would help indemnify Redstone from inevitable shareholder lawsuits. Redstone owns about 77% of the voting stock in Paramount. Common shareholders were quick to publicly criticize the terms of the Skydance deal after they were repeatedly revealed through the media in April and May.
The 45-day window for Paramount and NAI to seek a superior offer could be a smart resolution to the impasse over Redstone’s push for a joint shareholder vote. From Skydance’s perspective, the reason for engaging with NAI in its pursuit of Paramount was to take advantage of Redstone’s NAI having ironclad control of the company. But from Redstone’s perspective, the Skydance deal is likely to be tied up in costly litigation for months as the company is likely to struggle amid uncertainty.
Representatives for Paramount Global, NAI and Skydance declined to comment.
The surprise return of Skydance to the mix capped a busy 24 hours of speculation about the possible fate of Paramount Global and its assets. Late Monday, news broke that Barry Diller’s IAC was mulling a run at National Amusements to take over Paramount. The rumor brought historical perspective to the frenzy surrounding the studio as Diller previously fought hard against Redstone’s father, the late Sumner Redstone, for the prize to own Paramount in 1994.
Also Tuesday, there were rumors of an investor group looking to buy Paramount’s BET Networks unit for $1.6 billion, in a buyout deal led by former BET executive Scott Mills. And on Monday, Diversity confirmed a CNBC report that Warner Bros. Discovery is in active talks with Paramount Global about a sale or partnership between WBD’s Max streaming platform and broadcaster Paramount+. Both WBD and Paramount Global have taken multi-billion hits from losses incurred to build Max and Paramount+ with content, subscribers and marketing. The hope is that both services will add scale and compelling content to make the expanded platform a stronger competitor against Netflix, Amazon Prime Video, Disney+ and Hulu.
Paramount Global has struggled in the face of sector-wide headwinds. The studio conglomerate’s valuation has fallen by more than half over the past five years. But it’s still a collection of unique media assets that have value – although the bidders that have emerged are clearly looking to strike a deal at a time when heavy broadcast losses and structural changes at its core cable and broadcast businesses have put enormous pressure on on the company.
If realized, the 45-day period to play the field with other suitors would likely be designed as an alternative to a joint vote of shareholders, but something that would generate the same result. The board members of NAI and Paramount Global can reasonably say that they have considered all options for maximizing the value paid to common shareholders.
The conclusion of the Skydance talks led to a burst of optimism domestically that they could be spared the turmoil of an ownership transition. In late April, after Paramount Global CEO Bob Bakish was forced out, the board appointed a three-person Office of the CEO led by Chris McCarthy, head of Showtime/Paramount Networks and MTV Studios; George Cheeks, CEO of CBS; and Brian Robbins, CEO of Paramount Pictures and Nickelodeon. The trio have been busy outlining cost cuts, asset sales and strategic shifts to get the company back on stronger ground.
At the same time, Paramount has not been without success. The studio had a box office hit this weekend with a strong opening for A Quiet Pace: Day One. Jon Stewart’s return to the helm of “The Daily Show” has brought that show (and Comedy Central) to its highest ratings in years. And CBS has been on a roll this season with big turnouts for mega events, including the Super Bowl and Grammy Awards and a bona fide freshman drama hit in “Tracker.”
Sources close to the situation said the renewed Skydance-NAI discussions are “extremely serious”, but there is still no certainty that a sale will reach the finish line.