Paramount, the media empire behind CBS and ‘Top Gun,’ agrees to merge with Skydance

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Paramount Global—the sprawling media empire behind CBS, MTV, and one of Hollywood’s most storied movie studios—has agreed to merge with technology scion David Ellison’s Skydance Media, ending years of speculation over the company’s fate.

The deal announced late Sunday comes just weeks after a previous offer from Ellison to acquire Paramount collapsed in the eleventh hour, stunning industry observers and raising questions about the beleaguered media company’s future.

The agreement cements Ellison as a media mogul, ending Shari Redstone’s control of Paramount through her family’s National Amusements holding company, after her father, the late Sumner Redstone, won a fierce bidding war to piece together the media conglomerate beginning in the 1980s.

The complicated transaction will see Skydance first buy National Amusements, then merge with Paramount, valuing Skydance at $4.75 billion.

Ellison’s production company will “invest $2.4 billion to acquire National Amusements for cash and $4.5 billion for the stock/cash merger consideration to be paid for publicly traded Class A shares and Class B shares, as well as $1.5 billion of primary capital to be added to Paramount’s balance sheet,” it said.

The combined company will be helmed by Ellison as chief executive and former NBCUniversal chief Jeff Shell as president.

The deal caps a tumultuous and protracted saga that began in December, with the two companies entering into exclusive negotiations in April, resulting in the ouster of longtime Paramount chief executive Bob Bakish. In the meantime, the company has been run by a triumvirate of leaders: Brian Robbins, chief executive of Paramount Pictures; Chris McCarthy, chief executive of Showtime and MTV Entertainment Studios; and George Cheeks, chief executive of CBS.

While legacy media companies have struggled in recent years, Paramount, with its extensive portfolio of cable channels including MTV and Comedy Central, has been heavily exposed to the earthshaking consumer shift away from the traditional television model to streaming services. As services like Netflix exploded in popularity, millions of people abandoned cable packages in favor of lower-priced on-demand streaming shows and movies. Paramount, with its heavy reliance on the television business, was caught flat-footed.

In an attempt to stave off declining cable revenues, Paramount spent billions building its own streaming service, Paramount+. But it was late to the game, and like the rival streaming platforms erected by other legacy media companies, the service has struggled to gain enough traction with consumers to supplement its losses in the linear television business.

The iconic company’s valuation has also plunged amid the turmoil, with shares of Paramount falling more than 75% in the last five years. At a company town hall last month, Robbins acknowledged it had been a turbulent period as questions swirled over the conglomerate’s future.

“We’d like to take a moment to acknowledge the challenges of all the M&A speculation surrounding our company. We know what a difficult and disruptive period it has been,” Robbins said. “And while we cannot say that the noise will disappear, we are here today to lay out a go-forward plan that can set us up for success no matter what path the company chooses to go down.”

While Redstone had been approached in recent years to sell off pieces of Paramount’s extensive media portfolio, including Showtime and the cable network BET, several high-priced deals to break up the company were ultimately rejected.

In recent months, as takeover offers for Paramount began to once again heat up, Sony Pictures and the private equity firm Apollo Global Management offered a $26 billion deal that would have made Sony the majority shareholder and Apollo the minority shareholder. But the deal would have resulted in the breakup of Paramount, a prospect that Redstone rejected over her strong attachment to the company that her father had spent decades building.

The sale to Skydance Media, founded in 2010 by David Ellison, son of Oracle cofounder Larry Ellison, offered Redstone an offer she couldn’t refuse: billions in cash and the comfort of selling the family company to the heir of another titan who has promised to invest into Paramount’s future. Skydance and Paramount also had a deep established relationship, partnering in recent years to produce some of the box office’s biggest blockbusters, including “Top Gun: Maverick” and “Mission: Impossible” films.

“Given the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king,” Redstone said in a statement. “Our hope is that the Skydance transaction will enable Paramount’s continued success in this rapidly changing environment.”

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