Paramount Global parent National Amusements and Skydance Media have agreed to merge less than a month after abruptly ending previous deal talks. The merger brings together Paramount, a longstanding entertainment powerhouse, with Skydance, a newer but rapidly growing media company founded by David Ellison, son of Oracle founder Larry Ellison.
Details of the Merger Agreement
Paramount, known for its Paramount Pictures movie and television studios, the CBS network, and streaming service Paramount+, will combine with Skydance in a two-step deal. Initially, Skydance will pay $2.4 billion for National Amusements, which controls 77% of the voting shares of Paramount. Shareholders with non-voting stock will receive $15 per share or one share of non-voting stock in the new company. Class A shareholders, excluding National Amusements, will receive $23 per share or 1.5333 non-voting shares in the merged entity. This transaction values Skydance at $4.75 billion. The deal includes a 45-day window for other potential bidders to submit competing offers, aiming to appease shareholders who felt Skydance’s initial bid undervalued their stakes. The merger is subject to regulatory approval.
Impact on the Entertainment Industry
The merger unites Paramount, a studio with a storied history dating back to 1912 and famous for classics like “Titanic” and “The Godfather,” with Skydance, which has quickly risen in the industry since its founding in 2010. Skydance has produced or co-produced major hits such as “Top Gun: Maverick” and the “Reacher” series. David Ellison, who will serve as chairman and CEO of the newly formed company, emphasized the significance of this merger in the rapidly evolving entertainment landscape. Jeff Shell, former CEO of NBCUniversal and current chairman of RedBird Sports and Media, will become the president of the new entity. RedBird Capital Partners has identified approximately $2 billion in potential cost savings from the merger.
Future of Paramount Under Skydance Leadership
For Shari Redstone, controlling shareholder in National Amusements, the merger marks the end of her family’s long stewardship of Paramount. Her late father, Sumner Redstone, acquired Viacom in 1987 and built the foundation for what is now Paramount Global. Shari Redstone expressed her commitment to ensuring that Paramount’s legacy continues under the new leadership, focusing on growing its streaming footprint and expanding its core network TV, cable, and movie businesses.
The merger follows Paramount’s announcement of significant cost-cutting measures, including a $500 million reduction plan, exploring joint ventures for Paramount+, and selling non-core assets. The new leadership will review and potentially alter these plans as they integrate the operations of both companies. Paramount reported an operating loss of $417 million on $7.6 billion in revenue for the most recent quarter. In contrast, Skydance, a privately held company, expects its annual revenue to reach $1 billion in 2024. The consolidation reflects broader trends in the media industry, where traditional companies must compete with larger technology and entertainment giants.