Paramount, Skydance Media Reach Tentative Merger Agreement

Shares of Paramount Global jumped over 8% in after-hours trading on Tuesday on news that David Ellison’s Skydance Media and Shari Redstone’s National Amusements reached a preliminary agreement on a Paramount Global merger.

“National Amusements and Skydance have reached terms and the deal has been referred back to Paramount’s special committee,” an individual close to the deal told TheWrap.

Under the agreement, Skydance would pay $1.75 billion in cash to acquire NAI before merging with the Hollywood studio. The deal, which would have an enterprise value of about $2.4 billion, also includes a 45-day go-shop provision that gives other bidders the opportunity to make a better offer.

Representatives for Paramount, Skydance and National Amusements declined to comment. News of the deal was first reported by The Wall Street Journal.

The update comes after Redstone scrapped the two-step deal with Ellison last month, which would have included $1.5 billion in cash to help reduce the company’s $14.6 billion in debt and the option for class B shareholders to cash out at $15 apiece. That deal was opposed by the company’s minority shareholders, who argued that Redstone was being prioritized at the expense of the rest of Paramount’s investors.

While both sides previously agreed to the economic terms of a deal, there were outstanding issues they did not agree on — most notably, giving all shareholders a consent vote on the sale. The Journal notes that NAI is not mandating a shareholder vote under the new deal terms.

The new deal with Skydance comes as NAI received separate expressions of interest from “Baby Geniuses” producer Steven Paul and former Warner Music Group CEO and chairman Edgar Bronfman Jr. Additionally, IAC chairman Barry Diller is exploring a bid to acquire control of Paramount.

Other Paramount bidders include Sony Pictures and Apollo Global Management, who submitted a $26 billion all cash offer, and Allen Media Group founder Byron Allen, who placed a $30 billion bid including debt. Warner Bros. Discovery CEO David Zaslav also met with former Paramount CEO Bob Bakish about a potential merger in December, though those talks were later halted. 

In the meantime, Paramount is currently being run by its new co-CEOs Brian Robbins, George Cheeks and Chris McCarthy, who replaced Bakish in April. The trio unveiled a long-term strategy last month that includes streaming partnerships, divesting assets and $500 million in cost cuts in areas including legal and corporate marketing.

At an employee town hall last week, the executives said they’ve hired bankers to help with asset sales. Possible assets on the chopping block could include BET, Pluto TV, VH1 and the Paramount lot, which would be leased back for the studio’s use, four individuals familiar with the matter previously confirmed to TheWrap. According to Bloomberg, a group that includes BET CEO Scott Mills and CC Capital founder and senior managing director Chinh Chu are considering offering up to $1.7 billion to acquire BET.

Robbins, McCarthy and Cheeks are also advancing talks with potential partners in international markets that will “significantly transform the scale and economics” of its streaming business, which is currently on track to reach domestic profitability in 2025. The Office of the CEO said they could team up with other streamers or technology platforms on a joint venture or long-term partnership. CNBC reported on Monday that Warner Bros. Discovery is interested in a potential merger of Max and Paramount+.

Paramount, which has a market capitalization of $7.48 billion, has seen its stock price fall 25% in the past six months and 34% in the past year.

The post Paramount, Skydance Media Reach Tentative Merger Agreement appeared first on TheWrap.