Paramount & Skydance Deal Revived! The Shocking Details & What’s Coming Up Next!

A legendary film studio and broadcasting network are on the brink of a major generational shift, which could significantly alter the landscape of the entertainment industry.

On Tuesday, Shari Redstone and her kin agreed to the proposed acquisition of their investment firm, National Amusements Inc., also known as NAI, by tech heiress David Ellison for $2.4 billion. NAI holds the controlling shares of the struggling media conglomerate Paramount Global.

The offer from Ellison’s Skydance Media was presented to Paramount’s special board committee by the Redstone family, who now wait for the committee’s decision to either accept or decline. Paramount Global, the media behemoth in crisis, owns CBS, Paramount Pictures film studio, and cable channels including MTV, Nickelodeon, and Comedy Central.

Paramount’s board members started assessing the offer on Wednesday. This offer, quite similar to the one they nearly approved three weeks prior, was halted by Redstone’s sudden change of heart. The lingering question now is whether the deal will materialize this time and what the consequences will be once it is finalized.

“It’s akin to Groundhog Day,” says analyst Jamie Lumley from research firm Third Bridge via email. “The renewed optimism that both parties will finalize the deal is tempered by the uncertainty stemming from past failed negotiations and unresolved issues.”

Ellison, the 41-year-old son of billionaire Larry Ellison, co-founder of Oracle Corp., finally sees the prize within his grasp. The breakthrough occurred this week after months of dramatic negotiations, boardroom battles, and two abrupt about-faces by Redstone.

Redstone unexpectedly terminated Ellison’s deal on June 11, just as it seemed the agreement was almost finalized. This sudden shift in stance left industry watchers and Paramount insiders surprised as Redstone had been the most ardent supporter of Ellison’s bid, even going to the extent of sidelining those opposed to the deal, including former Paramount Chief Executive Bob Bakish.

Following the sudden halt in negotiations by Redstone, Ellison and his bid partners took around a week to regroup. Ellison then reached out to Redstone to restart the talks, say two individuals with knowledge of the process who wish to remain anonymous.

Ellison and his financial backers – RedBird Capital Partners, private equity firm KKR, and Larry Ellison – agreed to sweeten the deal with an additional $50 million intended for the Redstones’ NAI in an effort to rebuild trust and get the deal back on track, according to three individuals familiar with the negotiations.

The total value of the Skydance-Paramount deal comes to approximately $8.4 billion.

The sale of National Amusements would yield the Redstone family $1.75 billion, once the firm’s debts are cleared. Moreover, Skydance and its financial partners have agreed to provide a $1.5-billion cash infusion to help Paramount reduce some of its debt and enhance its balance sheet. These payments would be made after the deal is finalized, according to informed sources.

The deal also includes a provision to allocate $4.5 billion to purchase shares from Paramount’s B-Class, or nonvoting, investors who might be interested in cashing out.

Wall Street reacted positively to the news on Wednesday, with Paramount’s shares jumping nearly 7% to $11.46.

As part of the transaction, David Ellison plans to merge his privately-owned Skydance – the 14-year-old Santa Monica movie, television, and gaming firm responsible for the Paramount blockbuster “Top Gun: Maverick” – with Paramount.

Next, Paramount’s board needs to approve the deal. The arrangement would also need the approval from federal regulators, which could take several months.

Both parties were keen to seal the deal before next week’s annual Sun Valley, Idaho, media mogul conference, which attracts industry heavyweights such as Walt Disney Co. Chief Executive Bob Iger, Amazon CEO Andy Jassy and founder Jeff Bezos, media tycoon Rupert Murdoch — and Redstone.

The Skydance consortium also agreed to enhance provisions to protect the Redstone family from shareholder lawsuits associated with the deal, say informed individuals. Some nonvoting shareholders have long opposed the Ellison proposal, claiming it disproportionately benefits the Redstone family at the expense of regular investors.

In the days leading up to the deal’s collapse in early June, negotiations over indemnification proposals were particularly intense.

Redstone at one point sought to allow regular shareholders a nonbinding vote. However, this was rejected by Skydance and RedBird. Eventually, both parties agreed on a 45-day “go shop” period, allowing Paramount to entertain other offers.

It remains uncertain whether there are potential buyers interested in acquiring Paramount as a whole, primarily due to the serious challenges facing the cable programming business. The company’s cable channels, which were once industry frontrunners, have experienced a decline in viewership due to the shift towards streaming and a plethora of on-demand offerings from platforms like Netflix and Hulu.

Apollo Global Management and Sony Pictures Entertainment have shown interest in certain parts of Paramount. Sony was interested in the Paramount Pictures studio and its rich library, which includes the “Mission: Impossible” and “Top Gun” franchises. Warner Bros. Discovery was mainly interested in acquiring CBS to boost its television portfolio, which comprises TNT and CNN.

However, analysts suggest that even under Ellison, the company might need to consider offloading certain assets. For instance, Paramount is reportedly reconsidering the sale of BET.

“We can expect a stabilization of its balance sheet,” suggests Laurent Yoon, senior analyst at Bernstein. “If you can stabilize the balance sheet, it aids in growth investment. But even with growth investment, it will take time to see results.”

Other potential buyers for National Amusements have emerged in recent months, making Redstone’s decision more complex.

She has overseen the family’s empire since her father, Sumner Redstone, began facing health issues eight years ago. He passed away in 2020.

Other interested parties – former high-ranking Seagram and Warner Music executive Edgar Bronfman Jr. and Hollywood producer Steven Paul (“Ghost in the Shell,” “Baby Geniuses”) – separately offered to pay the family more than $1.75 billion.

Redstone’s decision to let go of her cherished family heirloom was triggered by the challenges posed by the rapidly evolving industry. This decision was tough for her, according to those close to the media mogul. Her family has always taken great pride in owning Paramount, formerly known as Viacom.

Initially, Redstone’s adult children – who stand to inherit the family’s wealth – were in favor of the Skydance deal, say two people familiar with the matter who wish to remain anonymous.

Besides the family’s Paramount shares, National Amusements also includes a regional movie theater chain founded by Sumner Redstone’s father, Mickey, a former linoleum floor salesman, during the Great Depression.

Times staff writer Samantha Masunaga contributed to this report.