Skydance Media CEO David Ellison bids for Paramount Global control. The CEO is making headlines with its preliminary offer to acquire Shari Redstone's stake in National Amusements, a move that could lead to control over Paramount Global.
Bloomberg first reported this development, igniting discussions across the media landscape. However, representatives for Skydance, National Amusements, and Paramount Global have declined to comment on the matter.
Deadline reports that the pursuit of Paramount Global by Skydance remains "status quo," with significant progress needed to secure a deal. National Amusements holds approximately 80% of Paramount Global’s voting stock, making it a formidable target. Ellison's interest seems focused on the studio, but acquiring Redstone’s stake in National Amusements could be a more cost-effective strategy than buying the entire company.
Warner Bros. Discovery, under CEO David Zaslav, also showed interest in National Amusements/Paramount Global. However, the Wall Street reaction was overwhelmingly negative, given Warner Bros. Discovery's financial struggles post-merger with Discovery and Warner Media.
Paramount Global faces its challenges, with financial strains due to streaming losses, the decline of linear television, and a weak advertising market. The company is even planning significant layoffs.
Ellison's backers, including his father, Larry Ellison, co-founder of Oracle, are pivotal in this endeavor. The Ellison family holds a majority share in Skydance, which has been a key player in Paramount films, including "Top Gun: Maverick," various TV series, and an animation division with a multi-year deal with Netflix.
This potential acquisition has sparked controversy among some Paramount Global investors. In the scenario where Skydance acquires National Amusements, Shari Redstone might receive a premium for her stake, but Paramount Global shareholders would not benefit similarly. Skydance Media, however, is not solely focused on leading a deal for National Amusements but is considering taking all of Paramount Global private.
Any deal for Paramount Global would require Shari Redstone's approval, given her majority voting shares. Despite preliminary information exchanges between Skydance and Paramount, full due diligence has yet to commence.
Skydance has been in talks with RedBird Capital Partners and KKR & Co. for a potential deal to buy National Amusements. This deal, however, hinges on merging Skydance with Paramount, possibly leading to a complete private takeover of the larger media company.
Redstone's consideration of selling her stake comes as the media landscape shifts toward streaming, with Paramount Global facing stiff competition from larger streamers like Netflix, YouTube, Apple, and Amazon. Nonetheless, no acquisition is certain, and discussions could disintegrate.
Paramount Global's shares saw a nearly 7% increase in premarket trading following these developments. The financial dynamics of such a deal are complex, with Paramount's market capitalization at $8.2 billion and about $15 billion in debt. Skydance might seek additional capital, potentially from private equity partners and Larry Ellison.
Skydance's disinterest in a partial deal, where it would only acquire National Amusements but not the entirety of Paramount, highlights its ambition for a comprehensive solution. Paramount's challenges as a publicly traded company, including the management of Paramount+ and declining linear cable assets, remain significant hurdles.
While Skydance, Paramount Global, National Amusements, and RedBird have remained silent on the issue, Warner Bros. Discovery's preliminary discussions about acquiring Paramount Global add another layer to this complex situation. If Redstone opts for a sale to Skydance, it could be partly motivated by concerns over Warner Bros. Discovery's potential preference for a merger with Comcast’s NBCUniversal.
As the situation evolves, the media and entertainment industry is closely watching the potential reshaping of one of its major players. With reports from Puck, The Wall Street Journal, and Bloomberg laying the groundwork for these discussions, the future of Paramount Global hangs in the balance, influenced by the strategic moves of key players like David Ellison and Shari Redstone.