Paramount to Merge with Skydance, Bolstering Media Empire

Paramount Global, the media giant behind CBS and MTV, has agreed to merge with David Ellison’s Skydance Media, concluding years of speculation about Paramount’s future.

This merger, announced on Sunday, follows a failed acquisition attempt by Ellison weeks earlier, which had cast doubt on Paramount’s direction. The deal now solidifies Ellison as a significant media figure, ending Shari Redstone’s control over Paramount, a conglomerate her late father, Sumner Redstone, had pieced together since the 1980s.

The transaction involves Skydance first acquiring National Amusements, followed by a merger with Paramount, valuing Skydance at $4.75 billion. Skydance will invest $2.4 billion to buy National Amusements and $4.5 billion for the stock/cash merger, plus an additional $1.5 billion to boost Paramount’s balance sheet.

Ellison will become the CEO of the new entity, with former NBCUniversal chief Jeff Shell serving as president. In a call with investors, Ellison and Shell emphasized their strategy to position Paramount as a “technological leader” in streaming, outlining plans for $2 billion in cost reductions.

Ellison expressed his commitment to the company’s creative strengths while acknowledging the challenges posed by the declining traditional TV model. He emphasized the need for new business strategies in light of these industry shifts.

This merger concludes a tumultuous period that started in December, with exclusive negotiations beginning in April and resulting in the departure of long-time CEO Bob Bakish. During this interim, the company was managed by Brian Robbins (CEO of Paramount Pictures), Chris McCarthy (CEO of Showtime and MTV Entertainment Studios), and George Cheeks (CEO of CBS).

Paramount has struggled in recent years due to the shift from traditional TV to streaming services. Despite investing heavily in its streaming service, Paramount+, the company has lagged behind competitors like Netflix, resulting in a significant drop in its valuation, with shares falling over 75% in the past five years.

During a recent town hall, Robbins acknowledged the difficulties posed by merger speculation and emphasized the company’s focus on future success regardless of its path.

Despite several high-priced offers to sell parts of Paramount, including Showtime and BET, Redstone rejected these due to her strong attachment to the company her father built. However, the offer from Skydance Media, founded by David Ellison in 2010, provided a compelling mix of cash and a commitment to Paramount’s future, which she couldn’t refuse.

Skydance and Paramount have a well-established partnership, having co-produced major blockbusters like “Top Gun: Maverick” and the “Mission: Impossible” series. Redstone expressed optimism that the merger would secure Paramount’s success in a rapidly changing industry, emphasizing that “content remains king.”