David Ellison’s Skydance Media is close to clearing a major hurdle in its pursuit of Paramount Global.
The media giant’s committee of independent board members has signaled its approval for Ellison’s takeover of the storied company, according to three people familiar with the situation who were not authorized to comment.
Formal approval by Paramount’s special committee could come as early as Monday, one of the knowledgeable people said.
However, the Skydance deal is not entirely stitched up. The arrangement still lacks the consent of Paramount’s controlling shareholder, Shari Redstone, sources said. Her support is key for any deal to move forward.
Representatives for Paramount were not immediately available to comment.
Redstone’s family owns 77% of the controlling shares of Paramount Global through their holding company National Amusements Inc., giving the heirs of Sumner Redstone enormous sway over the future of the struggling owner of Paramount Pictures, the CBS broadcast network, Comedy Central, MTV and Nickelodeon.
Complicating matters, as the Skydance sale process has dragged on, Redstone has fielded interest from at least two other interested buyers for National Amusements.
Late last week, Redstone was said to be mulling those offers, including one which was higher than the nearly $2 billion for National Amusements and its voting shares in Paramount that Skydance and its partners offered the family.
Redstone has long preferred the Skydance proposal because it would keep intact the media company that her father spent decades building into a behemoth.
In recent weeks, Redstone urged Skydance and its partners to increase their offer by at least $1 billion, one of the sources said.
In recognition that they needed to pony up more cash, and also win over members of the special committee, Skydance, joined in its bid by RedBird Capital Partners and private equity firm KKR, agreed last week to sweeten their offer. They proposed setting aside funds to buy out certain non-voting B-class stockholders at $15 a share during a second phase of the transaction. The parties worked over the weekend to hammer out such provisions.
Paramount B-class shares rose 7% to $12.71 in Monday’s midday trading.
Further boosting the bid for Paramount, Oracle’s billionaire chairman Larry Ellison has agreed to help his son get the deal over the finish line, one of the sources said.
Paramount’s shareholders have long protested the second phase of the deal, when Ellison intends to fold his company, Skydance, into Paramount.
Skydance Media is a Santa Monica production company that has backed movie and television hits such as “Top Gun: Maverick,” “Star Trek” and “Grace and Frankie.” In recent years, the firm — which has about 1,300 employees — has expanded into animation, sports and gaming.
Two years ago, Skydance secured $400 million in funding, giving Skydance a valuation of more than $4 billion.
Shareholders of Paramount have said that absorbing Skydance would dilute their shares. Non-voting shareholders have also complained that the Skydance deal would provide a premium to Redstone and her family for their voting shares.
Movie executive Shari Redstone arrives for the world premiere of “Top Gun: Maverick” in 2022 aboard the USS Midway in San Diego.
(Robyn Beck / AFP via Getty Images)
The movement in the deal talks comes less than a month after Skydance’s exclusive negotiating window expired — and on the eve of Paramount’s annual meeting with shareholders.
Paramount board members previously agreed to consider a rival $26-billion bid for all outstanding shares and to pay off existing debt from Sony Pictures Entertainment and Apollo Global Management, but those talks lost momentum in recent weeks, knowledgeable people said.
Sony, which has long been known as a cautious buyer, began to lose interest in the Apollo bid, believing it was too expensive, particularly given the struggles of Paramount’s cable channels that still provide the bulk of the company’s operating income. Sony would also face significant regulatory scrutiny due to foreign ownership restrictions, which would prevent it from owning CBS and its TV stations.
One of the company’s strongest assets — the top-ranked CBS network — would have been cleaved off.
Sony’s Tokyo-based parent company hasn’t forgotten how it overpaid for the Sony/Columbia-Tri Star deal decades ago, so the company was leery about a repeat scenario with Paramount, one of the sources said.
While many B-class shareholders were enthusiastic about the Sony and Apollo arrangement, Redstone has long opposed aspects of that proposal because it would have led to a break-up of the company and a sale of the Melrose Avenue movie lot.
Some Hollywood film producers and agents also have been rooting for the Skydance bid, believing it represents the best chance to preserve one of Hollywood’s oldest studios known for such gems as “The Godfather,” “Chinatown,” “Terms of Endearment,” “Top Gun,” and “Forrest Gump.”
The Wall Street Journal first reported that Redstone was considering other offers for National Amusements. On Monday, CNBC reported the Skydance deal was close to winning approval.
