Skydance's unique offer for Paramount Global would give it a large stake while keeping the company public
Skydance Media Makes Offer to Merge with Paramount Pictures #
Skydance Media has presented a unique proposal to merge its studio with Paramount Pictures. This unconventional takeover would involve Skydance owning either a substantial minority or majority stake in Paramount Global, while allowing Paramount Global to continue trading publicly. The consortium, consisting of Skydance, RedBird Capital Partners, and KKR, could potentially hold around 45% to just over 50% ownership in the new company. The offer aims to align voting and economic control and address the existing concentration of ownership with the Redstone family. The deal is still subject to further discussions and changes. Paramount Global and Skydance declined to comment on the matter.
The Skydance Plan and Paramount Global’s Struggles #
Skydance’s proposed deal is led by David Ellison, with support from his father, Larry Ellison, who is the Oracle co-founder and Chairman. The plan draws inspiration from Oracle’s successful transformation into a cloud services and AI-focused business. With valuable legacy media assets such as CBS, Paramount Pictures studio, cable networks, and streaming services like Paramount+ and Pluto TV, Paramount Global has faced challenges in recent years, with declining revenue and a downgrade in its debt rating. The market capitalization of Paramount Global currently stands at approximately $7.6 billion.
New Leadership and Strategic Considerations #
If the deal goes ahead, David Ellison would likely lead the new company, and former NBCUniversal CEO Jeff Shell would have a significant leadership role. The management team would explore divestitures, including selling BET Media Group and Showtime, which have previously been rejected by CEO Bob Bakish. The new leadership would also reassess Paramount Global’s future role in the media industry and evaluate the strategy for Paramount+ and its position in the broader media ecosystem.
Paramount Global Special Committee’s Decision #
Although the proposed transaction falls short of a full takeover, the message to investors is that the combination of David Ellison, Shell, Skydance’s assets, and its commitment to new media offers better growth prospects compared to the current situation with Redstone and Bakish. The decision for the Paramount Global special committee is whether this complex deal presented by Skydance is more favorable than the status quo and any other potential offers. Exclusive talks between the two parties have commenced, aiming to conduct thorough due diligence and potentially reach a deal in the next month or two. Additionally, private equity firm Apollo Global Management has recently made a bid for the entire company, but Paramount Global has chosen to focus on the exclusivity of negotiations with Skydance.