Inside the $8 Billion Skydance-Paramount Merger

Legal Shake-Ups, Power Plays, and the Future of Hollywood

At the beginning of July, David Ellison’s Skydance Media has announced a monumental $8 billion investment in Paramount Global, one of the world’s oldest entertainment companies, concluding a seven-month pursuit. The deal, that will provide the historic Hollywood studio with a younger owner, much-needed cash, and a likely profitable streaming service, received approval from a special committee of Paramount’s board of directors, followed by full board consent. The transaction will occur in two stages: first, acquiring National Amusements Inc., controlled by Shari Redstone, which holds nearly 80% of Paramount’s voting shares. This will be followed by a full merger, with the deal expected to close in September 2025.

David Ellison, son of Oracle’s Larry Ellison, emerged as the auction winner after a long saga. Skydance will buy National Amusement for $2.4 billion, acquiring its controlling stake in Paramount. The second phase involves merging with Paramount, offering $4.5 billion in cash or stock to shareholders and adding $1.5 billion to its balance sheet. Paramount Class A stockholders will receive $23 per share, while Class B stockholders will get $15 per share in a cash/stock election, with $4.5 billion in cash available to public shareholders. The merger could benefit Paramount, which has struggled with redundancies and debt. Skydance’s legal team, consisting of around a dozen lawyers, poses little threat to Paramount’s existing legal staff.

Yoo-Jean Chi, former head of business affairs at Paramount Pictures, joined Skydance in June as president of global business and legal affairs. Chi’s transition from Latham & Watkins to Skydance, which is being advised by her former firm, makes her an important figure in the acquisition process. “They need somebody who understands how public companies and boards operate, can make judgments on things like materiality, and knows how to conduct a shareholder meeting and deal with analysts,” said a source.

Mario Gabelli, a significant Paramount shareholder, has suggested he might sue to block the sale to Skydance. Paramount, having laid off 800 employees earlier this year, is aiming to cut an additional $500 million in costs as it shifts focus to streaming and away from traditional broadcast and cable businesses. Several key figures have departed Paramount recently, including global general counsel Christa D’Alimonte, who left after over a decade with the company and may receive approximately $6.5 million in severance. Her departure came just before Paramount finalized the agreement with Skydance after months of negotiations.

Paramount’s history is rich, with lawyers playing critical roles in major deals, including the Viacom-CBS merger and its subsequent split and re-merger. The firm Cravath has been a constant partner, advising Paramount on numerous transactions. As the Skydance deal progresses, Paramount’s legal alliances might shift. Simpson Thacher & Bartlett and Ropes & Gray are advising on the current merger, while Shearman, now A&O Shearman, retains some connections through former associates now at Paramount.

The anticipated Skydance acquisition marks a significant shift, as the companies merge, Paramount’s legacy and future direction will hinge on navigating these complex transitions.

SOURCE Deadline