Skydance Media and National Amusements Inc. Reach New Merger Agreement for Paramount Global

Paramount Global

Pact still needs approval by studio board’s special committee; Paramount expected to get 45-day window to shop for better offers

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

That deal will now be reviewed by Paramount Global’s special committee of its board of directors that has steered the media giant through its roller-coaster ride of 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 share in Paramount, have the right to shop around for a bidder to match the Skydance terms.

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

RELATED CONTENT: What Went Wrong: Inside Paramount’s Failed Merger Talks With Skydance Media

National Amusements abruptly ended months of talks with Skydance on June 11, saying it had concerns about the ability for the company and its partners to close the proposed $6 billion transaction. It’s not immediately clear if the economic terms of the new agreement have changed markedly from the pact that fell apart last month.

A source close to the situation said Skydance still balked at National Amusements’ request that the company’s noncontrolling shareholders get 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 some 77% of voting shares in Paramount. Common shareholders were quick to publicly criticize the terms of the Skydance deal as they steadily leaked out via media in April and May.

The 45-day window for Paramount and NAI to seeking a superior bid may be an artful solution to the impass over Redstone’s push for a common shareholder vote. From Skydance’s perspective, the reason to engage with NAI in its pursuit of Paramount was to take advantage of the fact that Redstone’s NAI has iron-clad control of the company. But from Redstone’s view, the Skydance deal was likely to be bound up in costly litigation for months while the company would likely struggle amid the uncertainty.

Representatives for Paramount Global, NAI and Skydance declined comment.

The surprise of the return of Skydance to the mix capped a busy 24 hours of rumors about the possible fate of Paramount Global and its assets. Late Monday, word surfaced that Barry Diller’s IAC was mulling a run at National Amusements in order to get ahold of Paramount. That rumor brought a historical perspective to the frenzy around the studio as Diller previously fought hard against Redstone’s father, the late Sumner Redstone, for the prize of owning Paramount in 1994.

Also Tuesday, rumors surfaced about an investor group looking 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 talks 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 multi-billion hits from losses incurred to build up Max and Paramount+ with content, subscribers and marketing. The hope is that both services add scale and compelling content to make the enlarged platform a stronger contender 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 nab a bargain at a time when heavy streaming losses and structural changes in its core cable and broadcast businesses have put enormous pressure on the company.

If it comes to fruition, the 45-day window to play the field with other suitors was likely crafted as an alternative to a common shareholders vote but something that would generate the same result. NAI and Paramount Global board members could reasonably say they considered all options for maximizing the value paid out to common shareholders.