Skydance’s unique offer for Paramount Global would give it a large stake while keeping the company public

Skydance
Media’s
offer
to
acquire
National
Amusements
and
merge
its
studio
with
Paramount
Pictures
isn’t
a
conventional
takeover.
The
question
for


Paramount
Global
shareholders
might
be:
Is
it
better
than
no
deal
at
all?

Skydance
has
made
a
unique
pitch
to
Paramount
Global’s
special
committee,
in
charge
of
accepting
or
rejecting
transactions,
and
its
investors,
according
to
four
people
familiar
with
the
parameters
of
the
offer.
Paramount
Global
would
continue
to
trade
publicly.
Skydance
would
own
either
a
substantial
minority
stake
or
a
majority
stake
in
Paramount
Global
by
merging
its
assets
and
raising
new
equity,
which
it
would
acquire
along
with
its
private
equity
partners
RedBird
Capital
Partners
and
KKR.

The
consortium’s
ownership
percentage
in
the
new
company
could
be
around
45%
or
just
over
50%,
said
the
people,
who
asked
not
to
be
named
because
the
discussions
are
private.
No
details
have
been
nailed
down
and
are
all
still
subject
to
change,
the
people
said.

Spokespeople
for
Paramount
Global
and
Skydance
declined
to
comment.

The
new
equity
will
be
dilutive
for
existing
shareholders.
But
it
will
align
voting
and
economic
control
in
a
way
that
hasn’t
been
the
case
with
the
Redstone
family,
which
currently

directly
or
indirectly
owns
77%
of
the
Class
A
voting
stock
of
Paramount
Global
and 5.2%
of
the
Class
B
common
stock,
about
10%
of
the
overall
equity
of
the
company.

While
Skydance
CEO
David
Ellison
is
primarily
in
charge
of
orchestrating
the
deal,
his
father,


Oracle
co-founder
and
Chairman
Larry
Ellison,
would
be
putting
up
some
of
the
new
funding,
said
the
people.
He
would
also
potentially
provide
Paramount
Global
with
access
to
artificial
intelligence
software
and
other
data
technology
from
Oracle.

Paramount
Global
has
many
valuable
legacy
media
assets,
including
CBS,
the
Paramount
Pictures
studio
and
its
physical
lot,
a
studio
library
with
films
such
as “The
Godfather,” “Titanic,”
and “Forrest
Gump”
and
cable
networks
such
as
Comedy
Central
and
Nickelodeon.
It
also
owns
its
subscription
streaming
service
Paramount+,
with

more
than
67.5
million
subscribers,
and
its
free
advertising
supported
service
Pluto
TV,

with
more
than
80
million
monthly
active
users.

Still,
it’s
struggled
to
grow
in
recent
years.
Paramount
Global’s
annual
revenue
for
2023
was $29.7
billion,
a
1.7%
decline
from
2022.
Paramount+

continues
to
lose
money.

Paramount
Global‘s
debt
rating
was
cut
to
junk
by
S&P
Global
Ratings
last
month
because
the
company’s
broadcast
and
cable
TV
business
is
declining
as
traditional
pay
TV
subscribers
cancel.

Paramount
Global
has
a
market
capitalization
of
about
$7.6
billion
and
had
$14.6
billion in
long-term
debt
at
the
end
of
2023.
When
CBS
and
Viacom
merged
in
2019,
the
combined
market

value
of
the
company
was
about
$30
billion.

Shares
were
trading
about
5%
lower
Friday.

In
the
past
decade,
Oracle
successfully
transformed
from
a
legacy
enterprise
technology
company
to
a
cloud
services
and
AI-focused
business.
That
provides
a
similar
thematic
blueprint
for
what
the
Ellisons
would
like
to
do
with
Paramount
Global
–
a
legacy
media
company
that
needs
to
lean
into
the
future
to
justify
its
existence.

David
Ellison
would
likely
lead
the
new
company.

Former
NBCUniversal
CEO
Jeff
Shell,
in
his
capacity
as
chairman
for
sports
and
media
at
RedBird,
is
also
expected
to
have
a
major
leadership
role.
Management
would
be
open
to
divestitures
that
current
CEO
Bob
Bakish
has
examined
but
ultimately
rejected,
such
as
selling
BET
Media
Group
and
Showtime,
the
people
said.

New
leadership
would
also
assess
more
existential
questions
to
Paramount
Global,
such
as
the
future
of
Paramount+
and
what
the
company’s
role
should
be
in
a
broader
media
ecosystem.
No
decisions
have
been
made
yet
about
these
larger
strategies,
the
people
said.

The
transaction
as
proposed
isn’t
a
full
takeover
of
Paramount
Global.
That’s
what
Paramount
Global’s
board
would
prefer,
but
Ellison
has
balked,
the
people
said.

Still,
the
message
to
investors
will
be
that
the
combination
of
David
Ellison,
his
dad’s
involvement,
Shell,
Skydance’s
assets
and
its
commitment
to
new
media
(including
Skydance’s
video
game
development
studio)
is
simply
better
for
future
growth
than
Redstone
and
Bakish.

The
Paramount
Global
special
committee
will
need
to
decide
if
Skydance’s
complicated
transaction
is
better
than
the
status
quo
—
and
also
better
than
any
other
offer
that
may
still
come.
The
two
sides
have
entered
exclusive
talks
to
do
deeper
due
diligence
and
potentially
reach
a
deal
in
the
coming
month
or
two,
the
people
said.

There
still
could
be
other
avenues
to
pursue.
Private
equity
firm


Apollo
Global
Management
lobbed
in
a
recent
bid
of
$26
billion
for
the
entire
company,

The
Wall
Street
Journal
reported
this
week.
But
the
Paramount
Global
special
committee
has
chosen
to
move
forward
with
the
Skydance
talks
in
exclusivity.
Redstone
has
unofficially
sought
a
buyer
for
Paramount
Global
for
years,
according
to
people
familiar
with
the
matter.
The
late
offer
by
Apollo
may
be
an
attempt
to
keep
the
private
equity
firm
around
the
hoop
in
case
the
Skydance
transaction
falls
through.

Warner
Bros.
Discovery
held
preliminary
discussions
with
Paramount
Global
but
stopped
working
on
a
deal
earlier
this
year,
CNBC

reported
in
February.

WATCH:
Faber
report:
Paramount
Global
deal
moves
to
fast
lane

Disclosure:
NBCUniversal
is
the
parent
company
of
CNBC.