Benzinga - by Vandana Singh, Benzinga Editor.
Film and TV studio magnate David Ellison, founder of Skydance Media, has reportedly extended a preliminary offer to acquire National Amusements Inc., the holding company of the Redstone family.
This strategic move aims to gain control of Paramount Global (NASDAQ:PARA), the media giant behind iconic brands such as MTV and Nickelodeon.
Discussions have ensued between Ellison and Paramount regarding the potential merger of Skydance Media into the larger media company after the acquisition.
Both parties are in the process of exchanging financial information as part of the negotiation process, Bloomberg reported, citing undisclosed sources.
National Amusements currently holds movie theaters and commands 77% of Paramount’s voting stock.
Ellison envisions financing the deal with assistance from Skydance’s investors, including his father, Larry Ellison, co-founder of Oracle Corporation (NYSE:ORCL), and private equity firms RedBird Capital Partners and KKR & Co (NYSE:KKR).
An alternative scenario under consideration is the privatization of Paramount Global, a move that could significantly escalate the overall deal cost, CNBC noted, given Paramount’s existing $15 billion net debt.
At 41 years old, Ellison aims to seize a unique opportunity to acquire one of Hollywood’s renowned studios, emphasizing his commitment to safeguarding Paramount’s assets, especially its 110-year-old namesake studio.
Despite the potential benefits, uncertainties loom over the deal’s success. Paramount’s dwindling share price, driven by declining viewership on cable networks and streaming losses, poses challenges.
The company’s market value currently stands at $9 billion, whereas Skydance’s last valuation was $4 billion.
A complex and possibly litigious process lies ahead due to Ellison’s unconventional approach to gaining control. Money manager Mario Gabelli, a substantial Paramount shareholder, has voiced concerns over potential preferential terms in the deal.
Past legal challenges, such as the lawsuit filed by CBS Corp. shareholders against Redstone during the Viacom merger, add to the apprehensions surrounding the negotiations.
Ultimately, Shari Redstone, Paramount Chair and majority stakeholder, faces a pivotal decision on whether to cede control of her family’s media empire.
Skydance isn’t interested in a deal that would only acquire National Amusements but not all of Paramount, CNBC noted, citing the people.
If Ellison secures control, he inherits a venerable studio and the challenge of navigating Paramount’s intricate web of financial struggles.
Warner Bros. Discovery Inc (NYSE:WBD) is reportedly in early talks regarding acquiring Paramount Global. If Shari Redstone sells to Skydance instead, it might be driven by her apprehension that Warner Bros. Discovery could be inclined to merge with Comcast Corp’s (NASDAQ:CMCSA) NBCUniversal.
Price Action: PARA shares are up 3.89% at $13.88 on the last check Thursday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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