In a landmark deal that will shake up the entertainment landscape, Shari Redstone has agreed to sell control of Paramount Global to a consortium led by Skydance, the production company led by David Ellison, and Gerry Cardinale’s RedBird Capital, the company behind Jeff Zucker-led RedBird IMI.
The sale, assuming it is approved by regulators and completed (and assuming a better bid does not emerge), would see Skydance acquire Redstone’s majority stake in National Amusements, which in turn would secure control of Paramount, the owner of the Paramount film and TV studios, Paramount+, CBS, and cable channels like Nickelodeon, MTV, and Comedy Central.
The consummation of the deal is the culmination of months of “will they or won’t they” speculation, with the Skydance consortium beginning talks late last year, only to see multiple rounds of negotiations fall apart when Redstone rejected the deal in place at the 11th hour last month.
The two sides, however, continued talking, leading to a new deal that secured Redstone’s approval.
According to sources, once the deal closes, the plan is for Paramount to acquire Skydance, which in turn will install its own leadership team at the stories entertainment company. Ellison will be CEO, with former NBCUniversal CEO Jeff Shell (currently working at RedBird) set to run the company day-to-day.
Skydance had to sweeten its deal offer in hopes of ensuring more value for non-voting Paramount shareholders who had complained that initial deal offers had guaranteed Redstone a premium but would have diluted them, giving them the short end of the stick.
National Amusements is a regional movie theater chain, however, Sumner Redstone turned it into a media behemoth by acquiring Viacom, Paramount and CBS. National Amusements only owns about 10 percent of Paramount’s equity, but it controls about 80 percent of its voting stock, giving it control of the entertainment firm.
Shari Redstone has run the company since her father’s death in 2020.
By acquiring a majority of National Amusements, Skydance will be able to control Paramount, including the prestigious studios (and all their associated intellectual property), the broadcast network, streaming service, and cable channels.
Paramount’s future has been the focus of intense speculation in recent months, with its streaming business still hemorrhaging cash, its linear TV business in continued decline, and with its credit rating on the ropes.
In addition to Skydance, Apollo and Sony have kicked the tires of the company, which ousted its CEO Bob Bakish in April, replacing him with a trio of executives in the “office of the CEO.”
National Amusements, too, has faced challenges. The company took a $125 million strategic investment in May from BDT & MSD Partners, with the proceeds paying down debt and paying back loans.
S&P Global downgraded Paramount’s debt to BB+ in March, which is considered “junk” status. “We downgraded Paramount due to the degradation of credit metrics from the accelerating declines in linear media and the shift toward a more competitive and less certain streaming model,” S&P’s Naveen Sarma wrote.
He added in a note after Bakish departed that the “shared management structure is not sustainable for Paramount Global, or for any publicly traded company, outside of a short transitional period.”
However, the co-CEOs –Brian Robbins, George Cheeks and Chris McCarthy — had released their own plan for the company, and told staff last month that they were already executing on it.
With Skydance set to take control and install new leadership and a new strategy at Paramount, all of Hollywood and Wall Street will be watching.
More to come.
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