Paramount Skirts Anticipated Merger Announcement with David Ellison’s Skydance Media
Paramount Global continued its discussion of cost reduction and debt payoff at its annual shareholder meeting today (June 4), bypassing any talk about merging with David Ellison’s Skydance Media. Talks of a buyout have been circling in recent days, with shareholders hoping to hear an official announcement of what would become a partially private acquisition. Paramount executives instead focused on the prospect of “eliminating redundancies,” “thoughtful licensing,” reducing overall expenses and selling assets to help pay off debts.
Paolo Maturo, senior credit research analyst at AXA Investment Managers, said he’s not surprised the merger discussion was avoided at today’s meeting. “Not having an official deal announced by now is in itself telling a lot. Obviously, there must be other considerations that the controlling shareholder is evaluating,” Maturo told Observer.
Paramount’s common stock has lost the vast majority (about 87 percent) of its market value since the height of the streaming boom during the pandemic in early 2021. The parent company owns brands like CBS, MTV, Paramount+ and Showtime. While Paramount intends to sell some assets, it remains unclear on which ones—though it’s believed Paramount is keen on growing its streaming platform, Paramount+. With productions like Tulsa King and Yellowjackets, Paramount+ subscribers grew 21 percent to 67.5 million in 2023. However, that growth doesn’t mean it’s not neck-deep in the streaming war, currently led by Netflix.
Philip Albersta, managing director of Embarc Advisors (and former chief operating officer of Audio Up), noted that Skydance already has a stake in NBCUniversal-owned Peacock and wouldn’t be surprised to see a streaming powerhouse emerge as a result of the supposed merger. “Financial markets need to brace for streamflation, a rising tide of price hikes and stricter password enforcement by streaming services,” Albersta told Observer. “And on the horizon? A battle for live sports rights, potentially driving subscription costs even higher.”
Skydance, founded in 2010 by the son of Oracle co-founder Larry Ellison, owns a portfolio of blockbuster franchises like Top Gun, Mission: Impossible and Star Trek, earning more than $8 billion at box offices worldwide. David Faber, co-host of Squawk on the Street, announced yesterday (June 3) in his Faber Report segment, that “the terms have been agreed to between the special committee and the buying group of Skydance […] and Redbird, the private equity firm that has been at this for so many months.” Faber added the deal is awaiting signoff from the control shareholder Shari Redstone, who owns National Amusements, the parent company of Paramount.
Because of this news, shareholders anticipated an announcement of the deal’s finalization in today’s shareholder meeting, but the company did not announce any finality, suggesting the deal remains in the waiting zone. Instead, Paramount focused on discussing cost-cutting measures and maintaining a tight outlook for the media company.
Paramount shares rest well below the $13 mark despite the fact that Skydance reportedly would buy out about half of Paramount’s class B stock at $15 per share (the remaining half would transfer to another publicly traded organization to be dubbed NewCo.)