Skydance Media Gets Board Committee Approval For Control Of Paramount Global After Lengthy Chase

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David Ellison‘s Skydance Media has gained approval for the company’s proposed acquisition of Paramount Global controlling shareholder National Amusements Inc. after seven months of talks.

The deal was blessed Sunday by a special committee of Paramount’s board, a person familiar with the matter told Deadline. The full board is now expected to consider the proposal.

Bloomberg News earlier reported on the special committee vote and said a formal announcement would be made Monday.

While the board action is a milestone, one of the features of the current agreement is a 45-day “go-shop” provision, which now allows NAI chief Shari Redstone to field alternative offers. Apollo Global Management, Barry Diller and Edgar Bronfman Jr. are among others who have explored bids. Apollo, both on its own and in partnership with Sony Pictures, has submitted formal offers in recent months but they haven’t gained much traction.

Under terms of the Skydance agreement, Redstone and her family will receive $1.75 billion, with additional funds going toward Paramount debt repayment. The transaction is expected to be the first of two parts, with a full merger between Skydance and Paramount Global to follow. NAI controls nearly 80% of Paramount’s Class A, or voting, shares. It holds only about 10% of its equity value, with that disparity adding to the complexity of deal negotiations in recent months. Skydance’s modest scale relative to Paramount has also unsettled some investors given the multiple that is attached to the eventual combination with Paramount.

Skydance is a longtime partner with Paramount Pictures as a co-financier on marquee franchises like Mission: Impossible, Star Trek, Transformers and Top Gun. Along with the 112-year-old movie studio, Skydance will gain control of a portfolio including CBS, Nickelodeon and Paramount+. Unlike other bidders aiming to break up the company, Skydance is seen as wanting to preserve the entity in much the same shape as it currently exists, though there will undoubtedly be significant cost cutting. That strategic vision helps explain Redstone’s longtime preference for Skydance over some other suitors, according to sources familiar with the deal talks.

Less than a month ago, it seemed that any hope of the parties reaching a deal had evaporated. Redstone pulled out of a planned deal at the 11th hour over concerns regarding her net proceeds and exposure to shareholder lawsuits. While earlier Skydance overtures caused Paramount’s already battered stock to sink even lower due to concerns about shareholder dilution, the most recent go-round has boosted the share price. In Hollywood and media circles, the Paramount M&A watch has punctuated a period marked by existential anxiety and fears emerged of another major studio poised to disappear in the wake of Fox’s absorption by Disney.

Ellison and his backers (reportedly including his father, billionaire Oracle founder Larry Ellison) were undaunted by Redstone’s last-minute reversal in June. Parting with the media empire built by her father, Sumner Redstone, has never been an easy process. Shari Redstone, after taking the reins a decade ago as Sumner Redstone’s health declined, succeeded with signature initiative, bringing Viacom and CBS back under the same corporate umbrella after multiple attempts. The merger of the companies into what is now Paramount Global closed in December 2019.

The triumph of shepherding the merger turned out to be short-lived, with Covid and numerous other challenges following in subsequent years. Today, Paramount faces a daunting reality. The company, which is a fraction of the size of top media rivals Disney and Comcast, is straining to make a profit in streaming as it confronts secular declines in its linear TV business and an unsettled moviegoing climate. While Paramount shares have enjoyed an uptick on the merger news, they are still worth less than one-third what they were when Viacom and CBS came together.

As the company has explored various M&A scenarios, it has also jettisoned longtime CEO Bob Bakish in favor of a tri-partate Office of the CEO consisting of veteran execs George Cheeks, Chris McCarthy and Brian Robbins. At the company’s annual shareholder meeting and a subsequent town hall with employees last month, the execs laid out their strategy, which consists of reducing expenses (targeting $500 million in annual cost savings), exploring streaming partnerships, joint ventures or other options and

“While we recognize that this is not a traditional management structure, we are confident that it will enable them to move quickly to implement best practices throughout the company and to drive improved performance,” Redstone said at the annual meeting.

As the Office of the CEO gets set to pass the baton (former NBCUniversal CEO Jeff Shell is in the wings as part of the Skydance bid), yet another round of changes will ripple through the company’s workforce. At the end of 2023, the company had 21,900 full- and part-time employees.

“We’d like to take a moment to acknowledge the challenges of all the M&A speculation surrounding our company,” Robbins said during the town hall. “We know what a difficult and disruptive period it has been. And while we cannot say that the noise will disappear, we are here today to lay out a go-forward plan that can set us up for success no matter what path the company chooses to go down.”

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