Skydance negotiates a deal to acquire control of Paramount

Skydance negotiates a deal to acquire control of Paramount

Skydance Media is putting together an all-cash proposal to take control of Paramount. Skydance CEO David Ellison, along with his billionaire father Larry Ellison, and other investors are negotiating to purchase Shari Redstone’s stake in National Amusements, Paramount’s parent company.

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Redstone, from the family that controls Paramount Global, has received several offers to sell his movie studio over the years. Now, Ellison proposes something more ambitious, as revealed by the Wall Street Journal Wednesday (10).

Skydance and Paramount

If successful, the deal would allow Ellison’s group to later pursue a merger of Paramount Global with Skydance, the producer of films including “Top Gun: Maverick.” Investors believe this merger is essential to completing the deal.

The potential deal is complex due to Paramount’s dual-class share structure and high capital requirements. The conversations are still in the early stages, without the due diligence (analysis and investigation process) having been completed. And the deal may not materialize.

The acquisition of National Amusements would require substantial additional investment from Skydance investors. The scenario takes place in a difficult period for the entertainment industry, marked by the decline in cable TV audiences and the stumble of the streaming market.

The transaction would mark the end of Shari Redstone’s control over her family’s media empire. Redstone took over National Amusements after a dispute over control of the entertainment empire and was the driving force behind the merger of Viacom and CBS, which created Paramount Global.

National Amusements owns 77% of Paramount’s voting stock. Skydance’s purchase of this stake would also give them control over television channels such as Nickelodeon, Comedy Central and MTV, as well as several movie theaters.

Negotiations and challenges

How do streaming recommendation systems work?  via Glenn Carstens-Peters/Unsplash

Talks between Redstone and Ellison are more advanced than with other interested parties, such as Warner Bros. Discovery. A subsequent merger between Skydance and Paramount would require an independent valuation of both companies. And there is no guarantee that Paramount’s minority shareholders would support the merger.

Skydance, valued at over $4 billion (approximately R$20 billion), is backed by major investors, including: Larry Ellison, RedBird Capital Partners, KKR and Tencent. On the other hand, Paramount, with a market capitalization of around $9.5 billion (R$46 billion), is struggling to make its streaming business profitable.

Paramount also faces challenges related to expensive sporting event rights and the renewal of television distribution contracts. The company already has a close relationship with Skydance, having co-produced several films and TV shows. In addition to Skydance, Warner Bros. Discovery has emerged as a possible buyer, but discussions between the companies have made no significant progress.

Skydance’s post-negotiation deal to buy control of Paramount appeared first on Olhar Digital.

Source: Olhar Digital

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