Paramount Global agreed to merge with Skydance Media in a deal that hands control of the storied Hollywood studio to producer David Ellison, ending one of the industry’s most dramatic acquisitions.
As part of the complicated deal months in the making, Paramount Chair Shari Redstone agreed to sell her family’s National Amusements Inc., which controls about 77% of the voting stock in Paramount, for $2.4 billion, according to a statement released by the company Sunday.
The accord marks an abrupt turnaround after talks between Redstone and Ellison, the son of Oracle Corp. co-founder Larry Ellison, collapsed last month. Redstone’s decision at the time to end discussions shocked the board and frustrated employees and investors, sending the stock tumbling.
Shari Redstone, chair of Paramount Global, has been seeking the best deal to protect her family legacy.
The Ellison family and RedBird Capital Partners have agreed to invest more than $8 billion in the business. That includes $1.5 billion to help pay down Paramount’s debt and $4.5 billion to buy Paramount shares.
Paramount shares rose as much as 7.2% in premarket trading on Monday before New York exchanges opened. The stock had closed 3.1% higher at $11.81 on Friday.
New owners and additional capital could provide a fresh start to beleaguered Paramount, the parent of CBS and MTV. Laden with more than $14 billion in debt, the iconic Hollywood company has struggled to compete in streaming and has suffered as cable TV audiences canceled their subscriptions and abandoned traditional channels like CBS and Nickelodeon. The company had a net loss of $554 million, or 87 cents a share, in the first quarter.
“Given the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king,” Redstone said in the statement. “As a longtime production partner to Paramount, Skydance knows Paramount well and has a clear strategic vision and the resources to take it to its next stage of growth. We believe in Paramount and we always will.”
Ellison, 41, will be chairman and chief executive officer. Jeff Shell, a former NBCUniversal executive, will be president. Ellison, who was raised around Silicon Valley luminaries like Steve Jobs, believes the company could thrive if it invests more in technology.
After the deal closes, the Ellison-led group will own about 70% of Paramount’s shares outstanding. The sellers have 45 days to seek better offers. Skydance and Paramount are slated to hold an investor call at 8:30 a.m. Eastern Standard Time.
Paramount, which owns the movie studio behind films including Titanic and The Godfather, has been controlled for three decades by the Redstone family. But the shares have lost more than half of their value since the Redstones recombined CBS Corp. and Viacom Inc. in 2019 to create Paramount Global.
Redstone, 70, pushed for a merger of Paramount with Skydance over a deal with other interested parties, an outcome she believed would be in the best interests of her family and the company’s legacy.
She persisted despite opposition from the company’s management and other shareholders, the resignation of four board members and the looming specter of litigation.
She dismissed the company’s Chief Executive Officer Bob Bakish, a vocal skeptic of the deal, replacing him with a trio of leaders who have promised $500 million in annual cost savings.
Just as a deal with Skydance seemed imminent last month and a special committee of the board convened to discuss the proposal, Redstone backed out.
Read more: Why Shari Redstone Walked Away From a Paramount Sale
By that point Ellison had reduced his offer for Redstone’s National Amusements so he could give more money to other Paramount shareholders, a sticking point for the company to agree to the deal but one that turned Redstone off.
Paramount, which was purchased by Shari Redstone’s late father Sumner in 1994, has been up for sale since late last year. National Amusements has held talks with various suitors, including Sony Group Corp. and Apollo Global Management Inc., which proposed a $26 billion deal. But that offer, which would have involved a foreign owner and the consolidation potentially of two large Hollywood studios, was seen as problematic and likely to face tough regulatory scrutiny.
More recently, Barry Diller, the 82-year-old chairman of IAC Inc. and former head of Paramount Pictures, has expressed interest in the company. So has longtime media executive Edgar Bronfman Jr.
Redstone came to see Ellison as her best option. He has been pursuing Paramount for months, sensing a rare opportunity to own one of Hollywood’s oldest studios. Founded in 1912, Paramount Pictures is the home of The Godfather, Star Trek and Forrest Gump.
“While people often debated whether content or distribution ruled the day, my father was governed in all of his decisions by his belief that content was indeed king,” Redstone told employees in an internal memo seen by Bloomberg. “That has never been more important than it is today, when in a cluttered marketplace, we continue to create content that resonates with our consumers, that they continually seek out, and that keeps them wanting more.”
Paramount is currently being led by a management committee of three senior executives after the company replaced CEO Bakish in April.
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