For months, Paramount and Skydance’s controlling shareholders tried to seal a merger that would transform the media industry, before those talks came to a sudden halt in June. Now, just weeks later, the two sides have reached a tentative agreement to merge, according to four people familiar with the negotiations.
The deal still needs to be approved by a special committee of Paramount's board of directors, said the sources, who asked not to be identified while talks resume.
If approved, the deal would merge Paramount — the parent company of CBS, MTV and Nickelodeon — and Skydance, the emerging film studio that helped produce “Top Gun: Maverick,” into a new Hollywood giant.
A deal would mark a changing of the guard in the media world, as traditional companies like Paramount struggle with the decline of cable television and money-losing streaming services. Shari Redstone, who controls Paramount through her stake in parent company National Amusements, is part of the family that has run the media conglomerate for decades. The new company would instead be backed by big-name investors like private equity firm RedBird and David Ellison, son of Oracle founder Larry Ellison.
It would also end a dramatic saga that had been playing out for months. Paramount and Skydance entered exclusive negotiations in April but let them lapse in May without reaching an agreement. Their talks continued even as other suitors emerged.
The two appeared to finally be on their way to a deal in June after a marathon weekend of negotiations. But just as Paramount's special committee was set to vote on the deal, lawyers for National Amusements sent an email to Paramount's special committee, ending discussions.
In the weeks that followed, Paramount outlined what a standalone future might look like for the company as it navigates a challenging media landscape. It named three executives to succeed Bob Bakish, who stepped down as CEO in April, in a joint role called the “office of the CEO.” They said at a recent shareholder meeting that they planned to explore a streaming joint venture and cut $500 million in costs as the media giant struggled with about $14 billion in debt.
The company's shares have fallen more than 16 percent over the past month as Paramount investors remain concerned about its outlook.
Paramount has been exploring a deal despite strong headwinds for traditional media. Critics have argued that the company was slow to enter the streaming space, leaving it too small and lagging behind rivals. They also point to missed opportunities, such as when Mr. Bakish in recent months refused to sell trophy assets like Showtime and BET to suitors offering billions.
Skydance and National Amusements are resuming negotiations shortly after a cooling-off period, three of the people said. This latest deal would offer Ms. Redstone better financial terms than the previous iteration. National Amusements’ equity would be valued at $1.75 billion, up slightly from $1.7 billion in the previous incarnation, three of the people said.
The deal would also give National Amusements greater protection from potential shareholder lawsuits over the deal, a sore point in previous negotiations given significant shareholder fears about the transaction.
The deal is expected to give Paramount a 45-day “go shop” period in which it can talk to other suitors about a potential deal, three of the sources said. Billionaire Barry Diller and his digital media conglomerate, IAC, have expressed interest in National Amusements, as have Edgar Bronfman Jr., the media and finance chief, and Steven Paul, the Hollywood executive best known for his work on the “Baby Geniuses” franchise.
Paramount's board of directors will now assess whether the new terms are sufficiently acceptable to shareholders.
