Paramount and Skydance Advance Negotiations Intensify

David Ellison, the mastermind behind Skydance Media, convened with Paramount’s board of directors towards the conclusion of the prior month to explore a possible partnership.

Shari Redstone’s endeavor to potentially divest her media empire has taken a notable step forward. Paramount, housing one of Hollywood’s most iconic movie studios alongside CBS and cable networks like Nickelodeon, has initiated discussions regarding exclusive negotiations with Skydance, a media conglomerate, as disclosed by four knowledgeable sources. Transitioning to exclusive negotiations signifies a significant advancement in a process veiled in uncertainty for months.

The likelihood of both parties agreeing to exclusivity remains uncertain, particularly with other investors actively pursuing Paramount. Apollo Global Management, a financial juggernaut managing over $500 billion, has proposed an $11 billion bid to acquire Paramount’s movie studio. However, Paramount’s board is pursuing a comprehensive deal encompassing its cable channels and CBS, rather than fragmented transactions. Apollo is meticulously evaluating proposals that might resonate with the company’s board, as disclosed by two individuals familiar with the matter. Byron Allen, whose Entertainment Studios owns the Weather Channel, has also expressed interest in acquiring Paramount.

Ms. Redstone, Paramount’s majority shareholder, commenced negotiations with Skydance to divest her stake in the company last year. She exercises control over Paramount through National Amusements, a holding entity housing her voting shares in Paramount. For years, Ms. Redstone refrained from selling, betting on the company’s fortunes improving with the surge of its flagship streaming service, Paramount+.

The prospective deal being deliberated entails Skydance acquiring National Amusements and merging with Paramount. However, this hinges on Paramount’s board approval, which has been deliberating options with the assistance of advisors for weeks.

Towards the conclusion of the preceding month, David Ellison, the visionary behind Skydance, conferred with Paramount’s board committee to outline his proposal, according to sources familiar with the discussions. Established in 2010, Skydance gained prominence for nurturing blockbusters for Paramount, including entries in the “Mission: Impossible” and “Top Gun” franchises.

Representatives for Paramount and Skydance refrained from providing comments, and the financial terms of the agreement remain undisclosed.

Paramount’s stock has depreciated by 18 percent since the onset of the year amidst industry headwinds. The company is trading at a considerable markdown compared to the combined valuation of Viacom and CBS, which merged to form Paramount in 2019. Although Paramount+ is still incurring losses, its deficits have abated, and it continues to amass subscribers.

S&P Global downgraded Paramount’s debt to junk status last week, citing “accelerating declines” in its conventional television business and ongoing ambiguity in its transition towards streaming. Some analysts posit that this rating adjustment might render Paramount more susceptible to acquisition, as it could circumvent a provision mandating an immediate settlement of the company’s debt.

SOURCE NY Times