Skydance Media may be able to complete its merger with Paramount after all! News broke at the beginning of this week that the two sides had finally found a formula to complete the deal, after a tortuous negotiation over the past several months.
As of early June, talks between the two sides had broken down, with Paramount’s controlling shareholder Shari Redstone calling off talks with Skydance CEO David Ellison. At the time, attention seemed to be turning towards Paramount redoubling its internal efforts to continue as a stand-alone entity.
The former CEO Bob Bakish was replaced with a new leadership team that outlined a get-well plan that included $500 million in cost reductions. Investors were unconvinced, sending the share price down by 16% after the end of talks between Skydance and Paramount.
The revised deal between Skydance and Paramount includes several sweeteners for Redstone, including a $50 million bump to the payout for Redstone and her family. Skydance also gave Redstone additional legal protections from potential shareholder lawsuits, should they be dissatisfied with the terms of the merger.
Many insiders to the movie business view the Skydance option as the best possible outcome for the Paramount sweepstakes. In addition to its famous movie studio, Paramount owns the television and cable channels CBS, MTV, Nickelodeon, and Comedy Central and the streaming service Paramount+.
All areas of the company are struggling with operating losses and sizeable debt. The Skydance offer is backed by the resources of CEO David Ellison’s billionaire father, Larry Ellison. These deep pockets should provide a longer runway by holding off some near-term pressures to allow time for a longer-term strategy to play out.
David Ellison has made his intentions clear that he intends to keep most of Paramount’s current assets intact. This would result in less disruption to ongoing operations, including a reliable flow of new movies from its studio.