In a strategic move that could reshape the landscape of the entertainment industry, Skydance Media CEO David Ellison is exploring an all-cash deal to acquire control of Paramount's parent company, National Amusements. The ambitious proposal involves financial support from Skydance investors, including Ellison's father, billionaire Larry Ellison, aiming to secure at least a majority stake in National Amusements from the Redstone family, current owners of Paramount.
If successful, the Ellison-led group plans a subsequent merger, bringing together Paramount Global and Skydance, known for producing blockbuster films like "Top Gun: Maverick." However, the proposed two-step deal faces significant challenges, including Paramount's complex dual-class share structure and the substantial capital required for the transaction. Talks with National Amusements are still in early stages, with due diligence on Paramount pending, and the deal's success remains uncertain.
The potential acquisition of National Amusements would mark a significant shift in control from Shari Redstone, who took charge of her family's media empire five years ago. The Redstones control National Amusements, which holds 77% of Paramount's voting shares. By acquiring National Amusements, Skydance investors would gain control not only of Paramount but also of its cable-television networks, including iconic channels such as Nickelodeon, Comedy Central, and MTV, along with several movie theaters.
As the entertainment industry grapples with declining cable viewership, changing moviegoing patterns, and the complex economics of streaming, this deal could signal a new era for Paramount under Skydance's leadership. Paramount Global, formerly ViacomCBS, has faced challenges in making its streaming business profitable, despite heavy investments in original content for the Paramount+ service.
While other potential suitors, such as Warner Bros. Discovery, have shown interest in Paramount, discussions with Skydance's Ellison appear more advanced. However, any merger between Skydance and Paramount would require careful consideration, possibly involving an independent committee of directors to assess the best interests of Paramount's non-controlling shareholders.
Skydance, backed by investors like Larry Ellison, RedBird Capital Partners, KKR, and Tencent, has strengthened its position with a $400 million capital raise last year, valuing the company at over $4 billion. In contrast, Paramount, with a market capitalization of about $9.5 billion, is navigating challenges in its streaming business and traditional TV operations.
Despite these challenges, Paramount and Skydance already share a deep collaboration history, co-producing successful franchises like "Mission: Impossible" and popular TV shows. The potential deal underscores the growing trend of media companies seeking strategic partnerships to navigate the evolving entertainment landscape.
While the discussions are ongoing, Paramount's renewal agreement with Comcast and its upcoming carriage deal with Charter in the spring adds complexity to the situation. The ultimate decision rests on the shareholders and their assessment of the potential benefits of merging with Skydance. As the entertainment industry witnesses this unfolding saga, the fate of one of Hollywood's storied studios hangs in the balance, waiting for the next chapter in its long and illustrious history.
