National Amusements President Shari Redstone speaks at the WSJ Technology Live Conference in Laguna Beach, California, on October 21, 2019.
Mike Black | Reuters
Skydance Media’s proposal to acquire National Entertainment and merge its studios with Paramount Pictures is not a traditional acquisition.The question is Paramount Worldwide Shareholders might ask: Is this better than no deal at all?
Skydance has made a unique pitch to Paramount Worldwide’s special committee charged with accepting or rejecting the deal and its investors, according to four people familiar with the parameters of the offer. Paramount Worldwide will continue to be publicly traded. Skydance will own a substantial minority or majority stake in Paramount Worldwide by combining its assets and raising new equity to acquire Paramount Worldwide with private equity partners RedBird Capital Partners and KKR.
People familiar with the matter said the consortium’s stake in the new company may be about 45% or slightly more than 50%. The person spoke on condition of anonymity because the discussions were private. Details have not yet been finalized and could still change, people familiar with the matter said.
Spokespeople for Paramount Worldwide and Skydance declined to comment.
The new stake will dilute existing shareholders. But it will combine voting power and financial control in a different way than the Redstone family, which currently directly or indirectly owns 77% of Paramount Global’s Class A voting stock and 5.2% of its Class B common stock. shares, accounting for approximately 10% of the company’s total share capital.
While David Ellison was largely responsible for orchestrating the deal, his father Oracle Co-founder and Chairman Larry Ellison will provide some of the new funding, people familiar with the matter said. He may also provide Paramount Global with access to artificial intelligence software and other data technology from Oracle.
Paramount Worldwide owns many valuable legacy media assets, including CBS, Paramount Pictures Studios and its physical locations, including “The Godfather,” “Titanic” and “Forrest Gump” Studio Library of Films, as well as Comedy Central and Nickelodeon.it also has Subscription to streaming service (Paramount+) Over 67.5 million subscribersand free advertising support service (Pluto TV) There are more than 80 million monthly active users.
Still, its growth has struggled in recent years. Paramount Worldwide’s revenue in 2023 was US$29.7 billion, a decrease of 1.7% from 2022. Paramount+ continues to lose money. Paramount WorldwideLast month, S&P Global Ratings downgraded the company’s debt rating to junk territory as its broadcast and cable businesses decline as traditional pay-TV subscribers cancel.
As of the end of 2023, Paramount Global’s market capitalization was approximately US$7.6 billion, with long-term debt of US$14.6 billion. When CBS and Viacom merged in 2019, the combined market The company is valued at approximately $30 billion.
Sky Dance Project
Over the past decade, Oracle has successfully transformed from a traditional enterprise technology company to a company focused on cloud services and artificial intelligence. It’s a similar thematic blueprint to what the Allison family wants to do with Paramount Worldwide – a legacy media company that needs to look to the future to justify its existence.
David Ellison may lead the new company. Former NBCUniversal CEO Jeff Shell is also expected to play an important leadership role as chairman of RedBird Sports and Media. Management is open to divestitures that current CEO Bob Bakish has explored but ultimately rejected, such as selling BET Media Group and Showtime, people familiar with the matter said.
The new leadership will also assess more existential issues for Paramount Global, such as the future of Paramount+ and the role the company should play in the broader media ecosystem. No decisions have been made on those larger strategies, people familiar with the matter said.
Better than nothing
The proposed deal is not a full acquisition of Paramount Universal. That’s what Paramount Worldwide’s board wanted, but Allison balked, people familiar with the matter said.
The message to investors, though, is that the combination of David Ellison, his father’s involvement, Shell, Skydance’s assets and its commitment to new media, including Skydance’s video game development studio, is a bigger deal than Redstone and Bakish is better positioned for future growth.
Paramount Worldwide’s special committee will need to decide whether Skydance’s complex deal is better than the status quo and better than any other offers that might come forward. The two sides have entered into exclusive talks to conduct more in-depth due diligence and could reach a deal within the next month or two, people familiar with the matter said.
There are still other avenues to pursue.private equity firm Apollo Global Management recently offered $26 billion to acquire the entire company, The Wall Street Journal reports this week, but Redstone chose to advance Skydance negotiations exclusively. Redstone has been informally seeking a buyer for Paramount Worldwide for years, people familiar with the matter said. Apollo’s late offer may have been an effort to keep the private equity firm in limbo if the Skydance deal fell through.
Warner Bros. Discovery The company held preliminary discussions with Paramount Worldwide but halted work on the deal earlier this year, CNBC reported in February.
Watch: Faber Report: Paramount Global deal on fast track
Revealed: NBCUniversal is the parent company of CNBC.
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