As someone who has closely followed the media industry for years, I’m deeply intrigued by this latest development in the saga of Paramount Global and the Redstone family. It’s a tale of power, wealth, and legacy that spans nearly four decades, and it’s reached a pivotal moment with the proposed handoff of Paramount to Skydance Media led by none other than tech billionaire and Hollywood newcomer, David Ellison.
According to sources familiar with the matter, tech entrepreneur David Ellison is in early discussions to acquire National Amusements Inc., the Redstone family’s holding company. If successful, this deal would grant Skydance Media, led by Ellison, control over Paramount Global.
On Tuesday, media tycoon Shari Redstone reached a preliminary deal, marking another significant shift in her business strategies. As the powerhouse behind National Amusements and its dominant 77% voting stake in Paramount Global, Redstone’s decisions continue to reshape the landscape of media and entertainment.
As a movie enthusiast, I’ve always admired Ellison’s drive and accomplishments in Hollywood. But recently, during the final stages of negotiating a two-phase partnership between NAI and Paramount, led by Ellison, she unexpectedly put a halt to the deal.
Determined as a film enthusiast, I refused to be discouraged as Ellison and his team pressed on, inching closer in my lengthy endeavor to acquire Paramount. This potential deal, anticipated to usher in a new era for the troubled media company and home to one of Tinseltown’s founding studios, has been a long-standing goal due to Paramount’s difficulty adapting to the streaming revolution and lagging behind deep-pocketed competitors.
With the approval of Paramount’s autonomous board members yet to be obtained, Ellison, the son of Oracle Corp. co-founder Larry Ellison, stands poised to seize the reins of a media empire encompassing Paramount Pictures, CBS broadcast network, and cable channels MTV, Comedy Central, and Nickelodeon.
Due to the rapidly evolving nature of the industry, Redstone found herself faced with significant challenges that ultimately led her to relinquish a cherished family heirloom – the controlling stake in Paramount, previously named Viacom, which had been passed down from her late father, Sumner Redstone. This choice was reportedly a tough one for her, as confirmed by those close to the media magnate. For generations, Redstone’s family took great pride in their ownership of Paramount.
Previously, Skydance and its investors intended to shell out over $2 billion according to the deal. Following repayment of National Amusements’ debt, approximately $1.7 billion was set aside for the Redstone family.
The insiders revealed that the new agreement boosts the Redstone family’s deal by approximately $50 million, bringing the total value to around $1.75 billion. This relates to their Massachusetts-based holding company, which besides Paramount shares, also oversees a movie theater chain founded during the Great Depression and operated regionally.
In response to Redstone’s concerns, as well as those of Skydance and its investors RedBird Capital Partners and KKR, the parties have reportedly added more robust protections against shareholder litigation in the deal’s terms. (Sources: knowledgeable people)
The agreement was first reported by the Wall Street Journal.
Paramount just received a generous boost from Skydance and its associates, with a $1.5-billion cash injection intended to help pay off some debt. Additionally, over $4 billion is earmarked for purchasing shares from eager investors looking to call it quits.
In the latest round of discussions, Redstone suggested allowing non-voting shareholders to have a say in a particular issue through a vote. This extra measure, which was not compulsory since Redstone held the majority voting shares, had been a major point of contention for Ellison, RedBird, and KKR.
A knowledgeable source revealed that the initial deal provides a 45-day window for other potential suitors to put forward their bids for Paramount.
The Redstone family’s control over their media empire, National Amusements, which was once worth almost $10 billion, is coming to an end with the proposed handover. This dynasty, known for its fame and feuds in America, has faced challenges including pandemic-forced theater closures, labor strikes in Hollywood last year, and a significant debt load, leading to a sharp decline in their wealth.
Based on my experience working as a dealmaker in the media industry, I can tell you that once the negotiations reach this stage, it’s a critical moment for all parties involved. The deal now being handed over to Paramount’s special committee for approval is a standard procedure in mergers and acquisitions. I’ve been through this process numerous times before, and I know that every second counts.
After several rounds of negotiations, the independent board members at Paramount had preliminarily agreed to the Paramount segment of the deal towards the end of May. However, approximately a week later, this agreement was terminated by Redstone. At that point, National Amusements stated they were supported by the three executives put in place to lead the company as their “CEO Office.” These leaders recently convened a town hall meeting with Paramount staff to discuss their strategy moving forward. This strategy involves approximately $500 million in cost savings, including job cuts.
I’m a proud advocate for Paramount, a company that boasts some of the most storied brands in the entertainment industry. With an impressive history spanning over a century, Paramount Pictures stands out as the home of iconic movies like “The Godfather” and “Chinatown,” which have left indelible marks on cinema. Beyond films, Paramount also owns the renowned CBS television network and local stations such as KCAL-TV (Channel 9) and KCBS-TV (Channel 2). However, it’s important to acknowledge that some of their once-thriving cable channels, including Nickelodeon, TV Land, BET, MTV, and Comedy Central, have been experiencing a decline in viewership.
In May, the independent board committee at Paramount made the decision to consider a $26-billion takeover proposal from Sony Pictures Entertainment and Apollo Global Management. This offer, which aimed to buy out all Paramount shareholders and pay off the company’s debts, was popular among several investors due to its attractive terms initially.
However, the enthusiasm for that bid faded among Sony’s leaders as they became more cautious about acquiring a business heavily dependent on shrinking traditional TV markets.
In the past few months, new prospective buyers for National Amusements emerged, adding complexity to Redstone’s decision-making process. Redstone, who has managed the family business since her father started dealing with health issues nearly a decade ago, faced this challenge until his passing in 2020. The other bidders presented offers that exceeded the terms of the Skydance proposal.
As a passionate cinema enthusiast, I’d put it this way: Among the hopeful gentlemen vying for her hand were Edgar Bronfman Jr., a past powerhouse executive at Seagram and Warner Music; Steven Paul, an accomplished Hollywood producer known for “Ghost in the Shell” and “Baby Geniuses”; and Barry Diller, who once came up short in a bitter bidding war for Paramount against Sumner Redstone back in 1994.
Several individuals in Hollywood, including producers, writers, and agents, have been hoping for Skydance’s takeover of Paramount. They view this as the most viable option for keeping Paramount an autonomous company. Previously, it was anticipated that Apollo and Sony would dismantle the business, with Sony integrating the film studio into its Culver City base.
Shari Redstone has consistently favored Ellison’s proposal as it seemed promising to keep the media conglomerate intact according to her preferences.
Last summer, Ellison initiated discussions with Redstone about potential business collaboration. These conversations gained public attention towards the end of last year. The prospect of this deal appealed to Ellison for several reasons: his past successful collaborations with Paramount Pictures, the opportunity to merge their creative assets, and the prestige of acquiring a renowned production studio. Analysts pointed these factors out as contributing factors to Ellison’s interest.
Alongside cinematic classics like “The Godfather” films and “Ferris Bueller’s Day Off,” Paramount boasts a varied collection of successful franchises such as “Transformers,” “Star Trek,” “South Park,” and “Paw Patrol.”
Ellison’s father, Larry Ellison, is said to be contributing financing to the deal.
After the deal is sealed, I’ve always looked up to Ellison’s ambition of having Paramount take over Skydance Media based in Santa Monica. With a focus on sports, animation, gaming, and both television and film production, it’s an exciting prospect.
Ellison is expected to run Paramount as its chief executive.
The handover to Skydance would require the approval of regulators.
Paramount’s stock rose 7% to $11.47 a share in after hours trading.
Paramount Global did not immediately offer comment.
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2024-07-18 21:55