Why Is Shari Redstone so Upset?

By the time you read to the end of this sentence, Shari Redstone may have made a deal with David Ellison’s Skydance. Or not.

Days after reports that Skydance had finally come to an agreement with Paramount’s special committee, there has been a pregnant pause as Redstone considered whether to pull the trigger on a complicated deal that would end her control of the entertainment empire assembled by her late father. 

While thousands of Paramount staffers and the media world wait, the pot has been stirred. Warner Bros. Discovery’s David Zaslav may have added a new element to the mix by signaling his interest in acquiring CBS and Paramount Global’s TV stations — from either Redstone or Ellison, as the case may be. And sources have noted that John Lasseter, the leader of the Skydance’s animation unit that has been touted as a positive in a possible deal with Paramount, has been absent from work for several weeks. Skydance sources say Lasseter is merely working from home while recovering from a surgery and that such information could only have come from enemies of a potential Ellison deal. 

Meanwhile, Redstone friend Steven Paul, a producer behind the Baby Geniuses, um, universe, who also manages Jon Voight, has jumped in with an offer to buy a majority interest in National Amusements, the holding company through which Redstone controls Paramount.

As the process has ground on for more than a month since the Skydance side made its “best and final” offer, sources say Redstone has at times been infuriated with Ellison. The reason for her anger is unclear. Some sources believe it was Skydance’s refusal to indemnify her in the all-but-certain event of shareholder lawsuits if the deal were to go through. Initially those suits seemed likely to come from non-voting “Class B” shareholders, who were unhappy that the Skydance deal would have paid Redstone more handsomely than it paid them. Skydance then sweetened the offer for non-voting shareholders, which in turn reduced the purchase price for Redstone’s National Amusements from $2.5 billion to $2.25 billion. That could have been yet another reason for Redstone’s anger. Perhaps it’s a coincidence that the Paul offer for a controlling interest in National Amusements is right about at that $2.5 billion mark.

Another possible reason for Redstone’s ire: Ellison had been an appealing deal partner because he had suggested that his buyer group would keep the empire that Redstone’s father had built more or less intact. But as one media executive familiar with both sides in the negotiation notes, “The Ellison folks have been very good at not saying what they actually intend to do. They’re not under any obligation to but … you don’t know whether they would want to stay in the broadcast or streaming business.” It’s unknown what Ellison may have promised Redstone privately but it’s possible she got wind of something that she took as a breach of a promise — say, maybe that WBD has had informal talks about buying CBS from whoever is in a position to sell it. 

Or maybe she’s thinking that if she’s going to start selling off assets, she may as well do it herself. It’s clear that there’s another path — she could sell some parts off, maybe get into a streaming partnership with NBCUniversal. But Zaslav hinted at his own interest in acquisitions at the recent Bernstein Strategic Decisions Conference. WBD is “a healthy company,” he said, that would find some fresh opportunities over the next two to three years “There’ll be some players that want to get out of the business. There will be some that will look to consolidate their streaming businesses with others. And so I think we will look to be opportunistic during that time,” he added. 

Zaslav is said to covet a broadcast network, which would put WBD on more equal footing with NBCU and Disney, which leverage their broadcast networks to help their cable portfolio, and would help with sports rights. As WBD is now facing the likely loss of its NBA games, a deal for CBS would also allow Zaslav to merge TNT Sports with CBS Sports, giving his company the NFL, the Masters and expansive college sports rights, while unifying the March Madness tournament in one place. And of course WBD could merge CBS News and CNN, allowing for extensive cost cutting and synergies, following through on a deal that was discussed and subsequently abandoned in the early 2000s. A WBD source with knowledge of Zaslav’s thinking points out that the company would be one of the few prospective buyers without significant regulatory issues because it doesn’t currently own a broadcast network or station group. 

Meanwhile, there are the questions swirling in the animation community about the absence of Lasseter, the former creative head of Pixar and Walt Disney Animation Studios. While Skydance Animation has been touted as an attractive element of a potential Skydance-Paramount hookup (though Paramount has its own animation division, with IP like SpongeBob SquarePants), but in reality, the picture has been complicated. Luck, Skydance Animation’s first feature film under Lasseter, got middling reviews upon its release on AppleTV+ in 2022, though it has performed steadily on the streaming service. (The film had been started before Lasseter was hired but was expensively reworked once he arrived.) Sources say the relationship between Skydance Animation and Apple blew up when the tech giant concluded that other planned projects were too costly and not strong enough creatively. One sticking point was a planned hand-drawn film, Ray Gunn, from Incredibles director Brad Bird for a number exceeding $150 million. 

Skydance then shopped the animation deal to other studios, which have their own animation divisions, but none stepped up. In October 2023, Skydance moved its animated feature slate to Netflix, meaning that none of Lasseter’s films has a chance of getting a meaningful theatrical release. And notably, against that backdrop, Lasseter’s health is key, as an informed source says a material change could upend Skydance’s deal with the streamer.

Yet another theory as to what is holding up the deal is that Redstone has been going through the Kubler-Ross stages of grief over losing control over the empire that her sometimes cruelly critical father built, and losing her position as a regular at the annual Sun Valley moguls retreat, which will kick off its 2024 event in about a month. Sources say Skydance has now offered Redstone some sort of emeritus title and compensation to make a deal more tempting.

Maybe that will help, maybe not. A longtime Hollywood insider says he is stunned by the messiness and length of the deal-making process. He suspects that the emotional aspect of the transaction may have simply proved overwhelming for Redstone. “There’s two ways to look at it,” he says. “One is, it’s a negotiation. And the other is it’s a matter of importance personally, where you just lose whatever brain power you have.” Says another prominent media veteran: “It’s probably the looniest sales process in the history of public companies.”

Rebecca Keegan contributed to this report.