The deal comes as Paramount is hemorrhaging losses as it tries to establish itself in a competitive streaming market dominated by Netflix, Disney and several others. The company is struggling with $14.6 billion in long-term debt and has lost more than half its market cap since 2019, even as it continues to produce blockbusters such as 2022’s “Top Gun: Maverick.” In addition to CBS and MTV, it owns Showtime, Black Entertainment Television and Nickelodeon. It has also recently expanded into animation and sports content.
“This is a defining and transformative time for our industry and for the storytellers, content creators and financiers invested in Paramount’s legacy and the longevity of the entertainment economy,” said Skydance founder David Ellison, who will become chairman and CEO of the combined company. He said the new owners are “committed to revitalizing the business and strengthening Paramount with modern technology, new leadership and creative disciplines that seek to enrich generations to come.”
Ellison, the son of Oracle billionaire Larry Ellison, founded Skydance in 2010. The company quickly established itself as a Hollywood force, producing such films as “Mission: Impossible – Ghost Protocol” (2011) and “Jack Reacher” (2012), starring Tom Cruise, as well as “World War Z” (2013), starring Brad Pitt.
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The Board of Directors considered various proposals and counter-proposals over a six-month period.eJust a few weeks ago, an attempt at a deal with Skydance fell through.
In April, amid a takeover battle, Paramount fired CEO Bob Bakish and created an “Office of the CEO” made up of three executives who head some of the company’s biggest assets: CBS CEO George Cheeks; MTV, Showtime and Paramount Media Networks CEO Chris McCarthy; and Nickelodeon and Paramount Pictures CEO Brian Robbins. They are tasked with cutting costs as Paramount works to reduce its debt.
The new all-stock deal values Skydance at $4.75 billion. Existing Skydance investors will receive 317 million Class B shares at $15 a share. Paramount shares fell more than 5% on Monday, closing at $11.19 a share.
A new buyer could still acquire Paramount, as the deal approved Monday allows for a 45-day “go-shop” period during which alternative proposals can be explored. Another potential buyer is media mogul Barry Diller, whose digital-media conglomerate has signed a non-disclosure agreement with National Amusements, according to a New York Times report, which is seen as a precursor to a deal being finalized.
The Wall Street Journal first reported news of the potential deal with Skydance last week.
