Skydance Media and National Amusements reach tentative deal for Paramount

In a shocking holiday week, Skydance Media and Shari Redstone’s National Amusements Inc. quietly renewed takeover talks and reached a tentative agreement to acquire Paramount Global.

That deal will now be reviewed by Paramount Global’s special committee of the board of directors, which has guided the media giant through its rollercoaster ride of mergers and acquisitions 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 during which Paramount and NAI, which owns Redstone’s controlling stake in Paramount, will have the right to search around for a bidder to meets the Skydance conditions. .

News of the renewed talks was first reported on Tuesday by the New York Times And Wall Street Journal.

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National Amusements abruptly ended months of talks with Skydance on June 11, citing concerns about the ability of the company and its partners to complete the proposed $6 billion transaction. It was not immediately clear whether the economic terms of the new agreement have changed significantly from the pact that fell apart last month.

A source close to the situation said Skydance still objects to National Amusements’ request to give the company’s non-controlling shareholders a chance to vote on the deal. The hope was that approval by a majority of common shareholders would help insulate Redstone from inevitable shareholder lawsuits. Redstone owns approximately 77% of the voting stock in Paramount. Common shareholders were quick to publicly criticize the terms of the Skydance deal as they steadily leaked through the media in April and May.

Paramount Global shares have been under pressure so far this year, falling 28%. On Tuesday, however, the stock shot up nearly 6% in regular trading and rose another 8% in after-hours activity, following the Skydance headlines and BET Networks sales call.

The 45-day window in which Paramount and NAI can make a higher offer could be an artful solution to the impasse over Redstone’s push for a joint shareholder vote. From Skydance’s perspective, the reason for partnering with NAI in the pursuit of Paramount was to take advantage of Redstone’s NAI’s ironclad control of the company. But Redstone said the Skydance deal would likely be mired in costly litigation for months, while the company would likely be left reeling from the uncertainty.

Representatives for Paramount Global, NAI and Skydance declined to comment.

The surprise return of Skydance to the mix capped off a busy 24 hours of rumors surrounding the possible fate of Paramount Global and its assets. Late Monday, word surfaced that Barry Diller’s IAC was considering a run on National Amusements to reach Paramount. That rumor brought historical perspective to the frenzy surrounding the studio as Diller, who previously led Paramount and 20th Century Fox and launched the Fox Broadcast network, previously fought hard against Redstone’s father, the late Sumner Redstone, for the price of owning Paramount in 1993. and 1994.

Also Tuesday, rumors surfaced about an investor group seeking to acquire Paramount’s BET Networks unit for $1.6 billion in a buyout deal led by former BET executive Scott Mills. And on Monday, Variety confirmed a CNBC report that Warner Bros. Discovery is in active discussions with Paramount Global for a sale or partnership between WBD’s streaming platform Max and the Paramount+ streamer. Both WBD and Paramount Global have taken billions of hits from losses incurred in building Max and Paramount+ with content, subscribers and marketing. The hope is that both services add scale and compelling content to make the expansive platform a stronger competitor against Netflix, Amazon Prime Video, Disney+ and Hulu.

Paramount Global has struggled amid industry-wide headwinds. The studio conglomerate’s valuation has fallen by more than half in the past five years. But it’s still a collection of unique media assets that have value – although the bidders who have come forward are clearly looking for a bargain at a time when heavy streaming losses and structural changes to its core cable and broadcast businesses have put enormous pressure on the company put. .

If it comes to fruition, the 45-day period to play with other suitors is likely intended as an alternative to a regular shareholder vote, but something that would yield the same result. The directors of NAI and Paramount Global could reasonably say that they have considered all options to maximize the value returned to common shareholders.

The end of the Skydance talks led to a burst of optimism internally that they might be spared the tumult of an ownership transfer. In late April, after Paramount Global CEO Bob Bakish was forced to resign, the board appointed a three-person office of 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 has been busy outlining cost cuts, asset sales and strategic shifts to get the company back on solid ground.

At the same time, Paramount has not been without successes. The studio had a box office success last weekend with a strong opening for “A Quiet Place: Day One.” Jon Stewart’s return to the helm of “The Daily Show” has propelled that show (and cabler Comedy Central) to their highest viewership in years. And CBS is on a roll this season with strong attendance 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 renewed discussions between Skydance and NAi are “extremely serious,” but there is still no certainty that a sale will reach the finish line.