National Amusements, owned by Shari Redstone, has reportedly halted talks with Skydance regarding a proposed merger with Paramount Global. This unexpected development comes after National Amusements had previously agreed to merger terms with a consortium including Skydance, RedBird Capital, and KKR, pending approval from Redstone. National Amusements currently controls 77% of class A Paramount shares. Following the news, Paramount shares closed nearly 8% lower on Tuesday.
The Wall Street Journal had first reported that the talks had ended, marking a significant turn of events. Just days before the news, Skydance and Paramount had agreed to the terms of the merger. Furthermore, Paramount’s annual shareholder meeting had taken place, during which the company’s leadership had outlined their plans for the future.
Paramount’s current leadership, known as the “Office of the CEO,” which consists of CBS CEO George Cheeks, Paramount Media Networks CEO Chris McCarthy, and Paramount Pictures CEO Brian Robbins, presented their strategic priorities in case the company was not sold. This shared leadership structure was established in April when former CEO Bob Bakish stepped down. The plan included exploring joint ventures in streaming with other media companies, cost reductions of $500 million, and divestment of noncore assets. These plans were presented to shareholders as an alternative option if Redstone chose not to sell.
Despite the unorthodox structure of the leadership team, Redstone expressed her support and approval of their ideas and leadership. Ultimately, Redstone holds the power to determine the future of Paramount and whether or not a sale will take place.
In May, another potential buyer for Paramount emerged in the form of Apollo Global Management and Sony. They expressed interest in acquiring the company for $26 billion. However, Redstone favored a deal that would keep the company intact, while Apollo and Sony intended to break up Paramount by separating its movie studio from other parts of the business.
Given Redstone’s preference for keeping Paramount together, it came as no surprise when Paramount and Skydance agreed to merger terms in June. The proposed deal would have seen Redstone receive $2 billion for National Amusements, while Skydance would purchase nearly 50% of class B Paramount shares for $15 each, totaling $4.5 billion. The remaining shareholders would have received equity in the new company. Additionally, Skydance and RedBird would have contributed $1.5 billion in cash to reduce Paramount’s debt. The deal with Skydance was valued at $8 billion, an increase from the initial $5 billion offer.
The plan outlined by Paramount’s leadership team last week prioritized debt reduction and aimed to restore the company’s investment-grade rating, which had been downgraded to junk status earlier this year. As of March 31, Paramount had approximately $14.6 billion in long-term debt.
While the sudden halt in talks between National Amusements and Skydance may come as a surprise, it is clear that Redstone’s vision for Paramount involves maintaining the company’s unity rather than breaking it up. The future of Paramount remains uncertain, but with the strategic plans put forth by the current leadership team and Redstone’s support, the company is determined to overcome its challenges and return to financial stability.
