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UPDATED with new timeline. Paramount Global and Skydance have agreed to terms for a merger, a person familiar with the deal talks confirmed to Deadline, with Paramount controlling shareholder Shari Redstone taking a final look.
CNBC reported the stepped-up timeline earlier Monday. As Deadline and other media reported this weekend, a revised offer from Skydance had gained traction, although it initially seemed unlikely that anything would be confirmed before Tuesday’s annual shareholder meeting. That event was already going to be a major one, with the three executives sharing the CEO’s office and laying out their strategic plans for the company.
Redstone controls 77% of Paramount’s voting stock through National Amusements.
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As Paramount Global approaches Tuesday’s annual shareholder meeting and a high-stakes employee town hall the next day, new details are emerging about Skydance Media’s latest takeover bid.
David Ellison-led Skydance, which has been in the running for months to take control of Paramount, had sweetened its bid in recent days to allay concerns from non-voting shareholders. Under the current scenario, these shareholders would be eligible to receive $15 per share, a 26% premium to the company’s share price on Friday. Sources familiar with the discussions confirmed the proposed terms to Deadline The Wall Street Journal and Bloomberg had reported them earlier Sunday.
In a two-step transaction, Skydance would first acquire National Amusements, which controls nearly 80% of Paramount’s voting stock, although only about 10% of its stock value. In the second step, the company would pump money into Paramount, which would then acquire Skydance. Of course, these are just the broad strokes, as the specific structure of the new entity is the subject of much back and forth. Adding even more intrigue was a report from the WJ that National Amusements has received overtures from other potential buyers, including one from producer Steven Paul, who valued the company at about $3 billion.
While many in Hollywood, including top filmmakers like James Cameron, have supported the Skydance deal, a separate screenplay involving private equity giant Apollo Global Management and Sony Pictures Entertainment attracted fans on Wall Street. The prospects for the Apollo/Sony option have seemingly darkened in recent days. SPE chief Tony Vinciquerra told Deadline last week that talks between the parties were making “progress,” but he also declined to mention Paramount or other M&A opportunities during remarks at a recent investor presentation at Sony.
While Skydance’s offer has been sweetened several times and a special committee of Paramount’s board of directors reportedly gave it the thumbs-up, a few sticking points remain. Perhaps the biggest is indemnification, the official term for who the company would support if shareholders or other stakeholders decide to sue over the merger. In recent months, as Skydance and its backers, including RedBird Capital, have pursued a deal, the idea of Class B (non-voting) shareholders suing National Amusements CEO Shari Redstone has become a realistic threat. One source told Deadline on Sunday night that this could potentially derail the deal, as could negotiating a “go-shop” provision that could allow Paramount and National Amusements to seek a better offer than Skydance’s.
The New York Times reported Sunday on the remaining hurdles to a deal.
Representatives for Skydance, Paramount and Redstone declined comment.
The shareholder meeting and town hall will both be key moments for the three-tier Office of the CEO that was installed following the ouster of Bob Bakish earlier this spring. No acquisition news is expected to be announced at the meeting, although the company’s post-Bakish strategy should become a bit clearer. CEO duties are divided between Brian Robbins, President & CEO of Paramount Pictures and Nickelodeon; George Cheeks, president and CEO of CBS; and Chris McCarthy, President & CEO Showtime/MTV Entertainment Studios and Paramount Media Networks. Each provided brief comments on Paramount’s April quarter results but did not answer questions from Wall Street analysts, but promised to provide more details on their strategic vision soon. “Soon” is officially released this week.
During the shareholders’ meeting, which will take place virtually, the executives will give a presentation to investors. They are expected to discuss this further on Wednesday during a town hall meeting with employees, who are eager to know more about leadership’s plans. While Paramount’s recent history has been full of dramatic moments, the current intrigue has taken on an existential dimension. “There’s a lot of emotion involved because of Shari’s family legacy,” a source noted. “It just adds to what is already a very complex financial situation to work out.”
With uncertainty clouding Paramount, having a troika at the top also creates new unrest among the rank and file. Multiple sources within the company have described to Deadline an increasingly stressful atmosphere, given that three senior executives who have steadily risen through the ranks in recent years are now also responsible for the company’s Wall Street profile. While Robbins, Cheeks and McCarthy appear to be making a positive impression, each has significantly more experience in entertainment than in financial operations or corporate governance. As they collectively replace Bakish amid rampant speculation about the company’s future, the intensity of the efforts is rippling through to their respective silos.
Paramount’s beleaguered shares are down 17% so far this year as investors worry about efforts to profit from streaming even as linear TV continues its inexorable decline. The shares are worth about a third of what they were in 2019, after Redstone’s long-planned reunion of Viacom and CBS finally became a reality.
The company did manage to complete a transportation renewal last month at Charter, the No. 1 U.S. pay-TV operator, without the damaging blackouts that hit Disney last summer in its battle with Charter.
“We expected at least some longer networks to be cut, so we would consider this part a win for Paramount,” MoffettNathanson analyst Robert Fishman wrote in a recent note to clients, adding that the financial details of the agreement remain unknown. “Obviously, the Total Rate Charter agreed to pay Paramount for the entire portfolio of networks, including CBS, Paramount+ ad-tier, Showtime linear and the cable networks, will determine the actual degree of profit or loss. Retaining transportation at the expense of accepting a large discount on previous rates for affiliates would be equally damaging to future cash flows.”