Paramount Global and Skydance Media are in the final stages of negotiations for a deal that would merge the two media companies and buy out the controlling shareholder, Shari Redstone. The special committee at Paramount Global, responsible for approving transactions, and Skydance Media, backed by private equity firms KKR and RedBird Capital Partners, are working on valuing Skydance’s assets and determining how much equity to add to the company as part of a merger, with current estimates valuing Skydance at around $5 billion.
The buyers are looking to finalize the deal in May, with plans to raise approximately $4.5 to $5 billion in new equity, part of which would be used to pay off Redstone. Skydance CEO David Ellison is expected to become the CEO of Paramount Global, with former NBCUniversal CEO Jeff Shell as president, resulting in the departure of current Paramount CEO Bob Bakish.
Although private equity firm Apollo Global Management and Sony have also expressed interest in buying out all Paramount Global shareholders at a premium, the special committee has favored Skydance’s offer due to its potential to provide shareholders future upside by keeping the company public with a cleaner balance sheet. The committee is not viewing Apollo’s offer as a competitive bid, as it lacks concrete details and exclusivity has been granted to Skydance.
One major hurdle that remains is Paramount Global’s renewal agreement with Charter Communications for CBS and its cable networks, which could significantly impact the company’s value. Bakish, who has successfully negotiated renewal deals with major pay-TV distributors in the past, will have control over Paramount Global’s fate with Charter during this critical period, despite his impending departure under the Skydance merger.
Skydance’s consortium, led by Ellison and private equity firms, plans to extend the exclusivity window for merger talks, with the hope of closing the deal by May. Despite facing opposition from some Paramount Global investors and board members, who are concerned about the dilution of common shareholders under the proposed merger terms, Bakish has emphasized the company’s commitment to creating shareholder value for all stakeholders.
Overall, Paramount Global’s potential merger with Skydance Media represents a significant strategic move in the media industry, with the outcome expected to reshape the landscape of both companies. The finalization of the deal, along with the resolution of outstanding negotiation hurdles, will have far-reaching implications for Paramount Global, Skydance Media, and the broader media landscape as a whole.
