Skydance Media, a film and television production company, has made a unique proposal to acquire National Amusements and merge its studio with Paramount Pictures. This offer, however, is not a conventional takeover and raises the question of whether it is better than no deal at all. Skydance’s proposal involves Paramount Global continuing to trade publicly while Skydance, along with its private equity partners RedBird Capital Partners and KKR, would own either a substantial minority stake or a majority stake in the company. The ownership percentage in the new company could be around 45% or just over 50%. The details of the offer are still subject to change.
The new equity that Skydance would acquire would be dilutive for existing shareholders. However, it would align voting and economic control in a way that hasn’t been the case with the Redstone family, which currently owns a significant portion of Paramount Global’s voting stock. In addition to funding, Skydance’s proposal also involves Oracle co-founder and Chairman Larry Ellison potentially providing Paramount Global with access to artificial intelligence software and other data technology from Oracle.
Paramount Global possesses valuable legacy media assets, including CBS, the Paramount Pictures studio, a studio library with iconic films, and cable networks such as Comedy Central and Nickelodeon. It also owns subscription streaming service Paramount+ and free advertising-supported service Pluto TV. However, the company has struggled to grow in recent years, with declining revenue and Paramount+ continuing to lose money. Its debt rating was even downgraded to junk status last month.
The Skydance plan aims to transform Paramount Global into a cloud services and AI-focused business, similar to how Oracle successfully transformed itself in the past decade. David Ellison, son of Larry Ellison and head of Skydance, would likely lead the new company, with former NBCUniversal CEO Jeff Shell also expected to have a major leadership role. The new management would assess various strategies, including potential divestitures and the future of Paramount+ within the broader media ecosystem.
While Skydance’s proposal falls short of a full takeover, it presents a compelling case for future growth compared to the current leadership under the Redstone family and CEO Bob Bakish. The Paramount Global special committee, responsible for accepting or rejecting transactions, will need to determine if Skydance’s proposal is better than the status quo and any other potential offers. Exclusive talks between Skydance and Paramount Global are underway, with the possibility of reaching a deal in the coming months.
It’s worth noting that private equity firm Apollo Global Management recently made a bid of $26 billion for the entire company, but National Amusements has chosen to pursue talks with Skydance in exclusivity. Previous discussions with Warner Bros. Discovery have also halted. The future of Paramount Global remains uncertain, but with Skydance’s unique offer and potential for growth, shareholders and industry observers are eagerly awaiting the outcome of these negotiations.
In conclusion, Skydance Media’s proposal to acquire National Amusements and merge with Paramount Pictures presents a unique opportunity for Paramount Global shareholders. While it is not a full takeover, the offer promises future growth and aligns voting and economic control in a way that hasn’t been seen before. With exclusive talks underway, the future of Paramount Global hangs in the balance as the special committee evaluates Skydance’s proposal against the status quo and any other potential offers.
