Media Heiress Shari Redstone Halts Potential Paramount Global-Skydance Merger Deal

Paramount Chairwoman Shari Redstone speaks on stage during the National Civics Day Event at Independence Visitor Center in Philadelphia, Pa., on Oct. 27, 2023 Tasos Katopodis/Getty Images

National Amusements, which owns a majority voting stake in the embattled entertainment giant Paramount Global, has called off merger talks with Skydance Media.

Skydance, founded by David Ellison in 2010, is known for co-financing blockbuster franchises such as “Mission: Impossible” and “Top Gun.” The potential deal has drawn attention for weeks, but the two sides have not been able to reach mutually acceptable terms for the merger.

This development occurred after earlier reports that Paramount and Skydance had agreed to terms of a deal, contingent only on a signoff from Paramount’s controlling shareholder and non-executive chairwoman, Shari Redstone.

The collapse of the deal leaves Paramount facing the same challenges it has long grappled with, including heavy debt and a declining television business. Recently, S&P Global has downgraded Paramount Global’s debt to junk status at BB+, which is one level below investment grade.

As reported by NBC News, the initial agreement terms were reported to involve Skydance buying out nearly 50 percent of class B Paramount shares at $15 apiece, totaling $4.5 billion, while Ms. Redstone would receive $2 billion for National Amusements. Additionally, Skydance and private equity firm RedBird Capitol would contribute $1.5 billion in cash to Paramount’s balance sheet to help reduce debt. Following the deal’s close, Skydance and RedBird would own two-thirds of Paramount, with the class B shareholders retaining the remaining third of the company. Paramount would remain publicly traded.

Leading Up to the Deal

Despite the setback, Paramount continues to navigate its challenges, and the entertainment industry awaits further developments in this ever-evolving landscape.

In December 2019, CBS Corp and Viacom reunited after a 13-year separation to form ViacomCBS, bringing together the media units of the late media mogul Sumner Redstone, the father of Ms. Redstone, who passed away in 2020. This merger marked a significant consolidation in the media industry. The new entity later underwent a rebranding, adopting the name Paramount Global in February 2022, reflecting its broader entertainment aspirations.

As part of its strategic evolution, ViacomCBS rebranded its CBS streaming service as Paramount+ in September 2020, expanding its reach to international markets. This move was a crucial step in competing in the global streaming wars. By November 2021, ViacomCBS had agreed to sell CBS Studio Center for $1.85 billion to private firms, a significant divestment aimed at optimizing its asset portfolio.

The narrative of corporate maneuvers continued into early 2023, with Mr. Ellision, CEO of Skydance, exploring an all-cash bid to acquire Paramount’s parent company, National Amusements. This was followed by a substantial $30 billion offer from media entrepreneur Byron Allen in January 2024, which included debt and equity components.

The landscape further shifted in March when India’s Reliance Industries agreed to purchase Paramount’s entire 13.01 percent stake in the local entertainment network Viacom18 Media for approximately $517 million.

Yahoo News Finance noted that April saw increased activity, with Apollo Global Management reportedly offering $11 billion to acquire the Paramount Pictures film studio. During the same month, Paramount’s board agreed to enter into merger talks with Skydance, signaling a potentially significant shift in ownership.