Paramount Global, the media giant behind CBS, MTV, and one of Hollywood's legendary movie studios, has agreed to merge with David Ellison's Skydance Media, ending years of speculation about the company's future.
The deal, announced late Sunday, comes just weeks after a previous acquisition attempt by Ellison fell through, leaving industry insiders puzzled and raising concerns about Paramount's prospects. This agreement marks a significant shift in the media landscape, with Ellison emerging as a new media mogul, ending Shari Redstone’s control of Paramount, which her father, Sumner Redstone, had painstakingly assembled beginning in the 1980s.
In this complex transaction, Skydance will first acquire National Amusements before merging with Paramount, valuing Skydance at $4.75 billion. Skydance will invest $2.4 billion to acquire National Amusements and $4.5 billion for the stock/cash merger consideration for publicly traded Class A and Class B shares, plus an additional $1.5 billion to Paramount’s balance sheet.
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Ellison will serve as the combined company's CEO, with former NBCUniversal chief Jeff Shell as president. The merger concludes a protracted saga that began in December when the companies entered exclusive negotiations, leading to the departure of longtime Paramount CEO Bob Bakish. Since then, Paramount has been managed by Brian Robbins, CEO of Paramount Pictures; Chris McCarthy, CEO of Showtime and MTV Entertainment Studios; and George Cheeks, CEO of CBS.
Legacy media companies like Paramount have struggled in recent years as consumers shifted from traditional TV to streaming services. Paramount, heavily reliant on its cable channels like MTV and Comedy Central, was slow to adapt. Despite investing billions in its streaming service, Paramount+, the company struggled to attract enough subscribers to offset its declining cable revenue.
Paramount's valuation has plummeted amid this turmoil, with shares falling over 75% in the last five years. At a recent town hall, Robbins acknowledged the challenges posed by ongoing merger and acquisition speculation. “We know what a difficult and disruptive period it has been,” Robbins said. “While we cannot say that the noise will disappear, we are here today to lay out a go-forward plan that can set us up for success.”
Despite multiple offers to sell parts of Paramount’s media portfolio, such as Showtime and BET, Redstone rejected high-priced deals to break up the company. Recent takeover bids included a $26 billion offer from Sony Pictures and Apollo Global Management, which Redstone declined due to her attachment to the company.
The sale to Skydance Media, founded by David Ellison, son of Oracle cofounder Larry Ellison, presented Redstone with an irresistible offer: billions in cash and assurance that the company would remain in the hands of another prominent family. Skydance and Paramount have a strong existing relationship, having co-produced major blockbusters like “Top Gun: Maverick” and “Mission: Impossible” films.
“Given the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king,” Redstone stated. “Our hope is that the Skydance transaction will enable Paramount’s continued success in this rapidly changing environment.”
