NEW YORK (AP) — Entertainment giant Paramount will merge with Skydance, ending a business run for decades by the Redstone family in Hollywood and injecting desperately needed cash into a historic studio that has struggled to adapt to a changing entertainment landscape.
It also signals the emergence of a powerful new player, David Ellison, founder of Skydance and son of billionaire Larry Ellison, founder of software company Oracle.
Shari Redstone's National Amusements Company owns more than three-quarters of Paramount's Class A shares through the estate of her late father, Sumner Redstone. She has fought to retain control of the company that owns CBS, the maker of blockbuster films such as “Top Gun” and “The Godfather.”
However, just weeks after turning down a similar deal with Skydance, Redstone accepted a deal with terms that hadn't changed much.
“Given the changes in the industry, we want to strengthen Paramount for the future while ensuring that content remains king,” said Redstone, chairman of Paramount Global.
The new company resulting from the merger is valued at approximately $28 billion.
Skydance, based in Santa Monica, California, has helped produce some of Paramount's biggest hits in recent years, including Tom Cruise films like Top Gun: Maverick and episodes of the Mission: Impossible series.
Skydance was founded in 2010 by David Ellison and quickly formed a production partnership with Paramount that same year. If the deal is approved by U.S. regulators, Ellison will become chairman and CEO of what will be called New Paramount.
The bumpy merger comes at a tumultuous time for Paramount, which at an annual shareholder meeting in early June presented a restructuring plan that included significant cost cuts.
Paramount's leadership has been unstable this year after CEO Bob Bakish, following several conflicts with Redstone, was replaced by a CEO office run by three executives. Four of the company's directors have also been replaced.
Paramount, however, has struggled for years to find its footing, and its cable business is hemorrhaging. To capture the growing streaming audience, the company launched Paramount+ in 2021but losses and debts continue to grow.
Sumner Red Stone He used National Amusements, the family’s movie theater chain, to build a vast media empire that included CBS and Viacom, which merged and split several times over the years. Most recently, the companies joined forces in 2019, undoing the split consummated in 2006. The company, ViacomCBS, changed its name to Paramount Global in 2022.
Under Sumner Redstone, Viacom became one of the country's media giants, home to pay television channels MTV and Comedy Central and film studio Paramount Pictures.
It's a company with a rich history, as well as a sizable bank of media assets, and Skydance wasn't alone in its interest in acquiring Paramount in recent months. Apollo Global Management and Sony Pictures also made competing offers.
Late last year, Warner Bros. Discovery also made headlines for exploring a potential merger with Paramount. But by February, Warner had apparently interrupted these talks.
