No more speculation, this is a new beginning for Paramount
Media giant Paramount Global, known for brands like CBS and MTV, will team up with Skydance Media, a technology company led by David Ellison. The deal ends years of speculation about Paramount's fate.
The deal comes just weeks after Ellison's previous bid to buy Paramount collapsed at the last minute. This shocked industry experts and raised questions about the future of the media company.
The deal means Ellison becomes the new media mogul and ends the control Shari Redstone had over Paramount through her family's company, National Amusements. Her father, the late Sumner Redstone, created the media empire in the 1980s after a fierce battle to acquire it.
The transaction involves first the purchase of National Amusements by Skydance and the subsequent merger with Paramount, with Skydance's value estimated at $4.75 billion. Ellison's production company is investing $2.4 billion in cash to purchase National Amusements and $4.5 billion in an all-cash merger, which includes both publicly traded Class A and Class B shares, as well as $1.5 billion in primary equity added to Paramount's balance sheet.
The combined company will be led by Ellison as CEO and former NBCUniversal chief Jeff Shell as president.
The deal caps a long and tumultuous saga that began in December. It also resulted in a replacement as CEO of Paramount, with Bob Bakish being replaced by a triumvirate of executives: Brian Robbins, CEO of Paramount Pictures; Chris McCarthy, CEO of Showtime and MTV Entertainment Studios; and George Cheeks, CEO of CBS.
Paramount Global
PARAParamount $PARA-0.9%, as a traditional media company, has faced major challenges in recent years due to the dramatic consumer shift from the traditional television model to streaming services. With the expansion of services like Netflix, many people have abandoned cable packages in favor of cheaper on-demand streaming services. Paramount, heavily dependent on the TV business, has underestimated this change.
To counteract declining cable TV revenues, Paramount invested billions in building its own streaming service, Paramount+. But it came late to the market, and like other traditional media companies, the service struggled to attract enough customers to offset losses from linear TV.
The company's value has also plunged amid these problems, with Paramount's stock falling more than 78% over the past five years. At a recent company meeting, CEO Robbins acknowledged that it has been a turbulent period and urged employees to hang in there.
In recent years, Redstone has turned down several lucrative offers to sell parts of Paramount's media portfolio, including Showtime and cable network BET. In recent months, as interest in Paramount has picked up again, Sony Pictures and private equity firm Apollo Global Management have offered $26 billion, which would make Sony the majority shareholder and Apollo a minority one. However, this offer would have meant breaking up Paramount, which Redstone rejected because of her strong attachment to the company her father had built over decades.
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