Paramount Global sale collapses after Shari Redstone pulls support for David Ellison deal

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As an admirer of the Redstone family and their storied history in the media industry, I am both intrigued and saddened by the latest developments surrounding Paramount Global and their proposed sale to Skydance Media. The high-stakes drama that unfolded over the past few months has been a rollercoaster ride for investors and observers alike, with twists and turns at every corner.

As a devoted movie enthusiast, I’ve been eagerly following the developments surrounding Paramount Global for several months now. The stakes were high with all the dramatic boardroom tussles unfolding. However, my excitement was dashed on Tuesday when the proposed sale of Paramount to Skydance Media, spearheaded by David Ellison, crumbled. Sadly, this deal didn’t gain the approval it needed from a pivotal figure in its story: Shari Redstone, the influential controlling shareholder.

The Redstone family’s investment company, National Amusements Inc., stated it couldn’t agree on terms with Skydance for their influential shares in the media firm that oversees CBS, Comedy Central, Nickelodeon, and Paramount Pictures at Melrose Avenue.

The NAI family expressed their appreciation to Skydance for their dedication over several months towards exploring this possible deal. We are excited about the continued productive partnership between Paramount and Skydance in the creation of major franchise films such as “Mission: Impossible” and “Top Gun.”

Currently, Redstone is firmly committed to maintaining her family’s media business, which they have owned since 1987,despite its financial difficulties and industry upheaval due to consumers moving towards streaming platforms and away from conventional TV networks.

An agreement with Skydance was nearly finalized, but the heirs of media magnate Sumner Redstone (Shari’s father) found it difficult to let go of Paramount. Despite its struggling stock price, Paramount has historically been regarded as a prized possession. The company has experienced a significant loss – approximately two-thirds of its value – over the past five years.

National Amusements expressed its confidence in Paramount’s new leadership team of George Cheeks, Chris McCarthy, and Brian Robbins, who have taken on key executive roles. The company also endorsed their business strategy, which involves cost reduction measures, and the board’s initiatives to discover ways to boost value for all Paramount shareholders.

Paramount shares fell 8% to $11.04 on Tuesday.

At the same time that Paramount Global’s independent directors were set to cast their votes on David Ellison’s $8-billion bid to acquire the media firm, Redstone made his decision. David Ellison is the son of Larry Ellison, a billionaire tech pioneer and Oracle Corp.’s co-founder.

For some time, Paramount’s board members held differing views. Some were against the two-phase deal, believing it would disproportionately benefit the Redstone family at the cost of other investors. However, within the past 10 days, an unofficial accord had been reached between the independent board directors and Skydance.

The committee had not made a formal recommendation on the deal to Paramount’s full board.

National Amusements requested the committee to present their recommendation prior to last week’s annual shareholders meeting, but that timeline expired. The holding company aimed for a larger Paramount board to evaluate the deal, however, with the investor gathering concluding, the tenures of four directors ended. Consequently, only six board members were left to mull over this significant transaction.

Right before the committee was set to cast their votes, National Amusements notified the group that they would withhold approval for the deal since they own approximately 77% of Paramount’s voting rights.

A surprising turn of events occurred over the weekend: Skydance, together with its investors RedBird Capital Partners and KKR, managed to finalize the financial aspects of the deal with National Amusements’ representatives. This information was shared by sources who requested anonymity.

After making some improvements to make the offer more appealing, Skydance enabled nonvoting shareholders to sell their shares at a slightly higher price, leading to that significant advancement.

The decrease in the proposed cash sum due to that move displeased the Redstone matriarch, as reported by those familiar with the deal.

Furthermore, Redstone made a request for other shareholders, including those with non-voting stocks, to have a say in the proposed sale. However, Skydance Group rejected this proposal according to informed sources.

Lately, I’ve been approached by several interested parties looking to buy National Amusements and its influential Paramount shares. The deals on the table surpassed the expected value of the Skydance offer for us.

I’ve learned that Edgar Bronfman Jr., a renowned former executive at Seagram and Warner Music, and Steven Paul, an accomplished Hollywood producer known for films like “Ghost in the Shell” and “Baby Geniuses,” have both expressed their intention to acquire National Amusements, according to sources close to the situation.

Any agreement with Bronfman, supported by Bain Capital, would be conditioned on him conducting a thorough investigation first. The ex-entertainment magnate and liquor heir, known for persuading his family to buy Universal Studios before selling it to Vivendi over two decades ago, has proposed offering over $2 billion for Redstone.

Redstone is leaving her options open, the knowledgeable people said.

The Skydance deal, which had initially gained support, now appears uncertain. According to two reliable sources, the leading independent director, Charles Phillips, has consistently been against this deal and is anticipated to cast a dissenting vote.

A well-informed source shared that Phillips, a past Oracle president, expressed his opinions to Redstone.

Redstone held the view that Ellison’s proposal was the most feasible choice for saving the media firm, as the family was against Paramount being dismantled. This was a contrast to the plans of other potential buyers like Apollo Global Management and Sony Pictures Entertainment, who intended to split up Paramount. The appeal of the $26-billion offer from this group waned when it seemed that Skydance’s deal had a better chance of success.

The board has faced significant conflicts regarding the deal since the beginning of the year. In April, Bob Bakish, CEO of Paramount and a critic of the Ellison deal, was dismissed from his position.

Corporate governance specialists warned that the disputed deal could lead to shareholder litigation due to the Redstones’ significant control over the company.

In their respective reports, The Wall Street Journal broke the news about the deal’s failure, while Matt Belloni of Puck was the first to reveal details of the meeting and Phillips’ objection.

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2024-07-18 22:28