Paramount Agrees to Merge with Skydance, Crowning New Hollywood Mogul

NEW YORK Skydance Media and Paramount Global have agreed to merge, the companies announced late July 7, opening a new chapter for one of Hollywood's oldest studios.

Ms. Shari Redstone, Paramount's non-executive chairman, will sell her family's majority stake in the company in a complex transaction that will result in a merger.

The deal represents the end of an era for the Redstones, whose late patriarch, Mr. Sumner Redstone, built the family's drive-in movie chain into a media empire that included Paramount Pictures, the CBS broadcast network and the cable television networks Comedy Central, Nickelodeon and MTV.

The merger will reunite Paramount, home to such classic films as Chinatown, The Godfather and Breakfast at Tiffany's, with its financial partner on several recent major films, including Top Gun: Maverick, Mission: Impossible Dead Reckoning and Star Trek Into Darkness.

The deal will elevate Skydance founder David Ellison, 41, the son of Oracle founder Larry Ellison, to the new power broker in Hollywood. He is set to inherit a media company that faces a mountain of challenges as it navigates an entertainment industry upended by the streaming video revolution.

Paramount has lost nearly $17 billion (S$22.9 billion) in value since the end of 2019 as its traditional TV business has eroded faster than its Paramount+ streaming service can generate profits.

Tensions have erupted within management. Its chief executive, Mr. Bob Bakish, was ousted in April after a dispute with the company’s majority shareholder, Ms. Redstone, over the Skydance deal. He was replaced by a trio of executives who occupy the CEO’s office, a group that has proposed making $500 million in budget cuts, selling off some assets and exploring a possible joint venture partner for Paramount+.

Those plans, which would involve more layoffs at a company that has already seen a wave of job cuts, could now be called into question.

David Ellison will likely be joined at Paramount by Jeff Shell, the former NBCUniversal CEO and veteran media executive, once the deal closes, according to two people familiar with the discussions. Mr. Shell left NBCUniversal in 2023 after an investigation into an inappropriate relationship and later joined private equity firm RedBird Capital Partners as chairman of sports and media.

The Paramount-Skydance deal is the culmination of months of negotiations that appeared to be derailed when Ms. Redstone abruptly called off talks on June 11.

Other potential candidates for National Amusements, a company that holds the Redstones' voting shares in Paramount, have emerged: Hollywood independent producer Steven Paul, Seagram heir Edgar Bronfman Jr., who is backed by private equity firm Bain Capital, and IAC Chairman Barry Diller.

Meanwhile, talks between Mr. Ellison and Ms. Redstone have quietly resumed and become more constructive, according to two people familiar with the discussions.

Skydance has increased the amount it will pay the Redstone family for the sale of National Amusements to $1.75 billion, one of the people familiar with the terms of the deal said. It also strengthened legal protections against potential shareholder lawsuits, paving the way for a new deal, the source said.

Mr. Ellison and his backers, including Redbird Capital Partners, have also moved to shore up Paramount’s balance sheets, promising a $1.5 billion infusion, the source told Reuters. They have also offered to buy about 50 percent of Paramount’s nonvoting stock for $15 a share, the source said.

Holders of Class A voting shares would receive $23 per share, according to another source.

The deal also gives Paramount 45 days to find a better offer, leaving open the possibility of another twist in an already chaotic deal process. REUTERS