For months, Paramount’s controlling shareholder and Skydance sought to seal a merger that would transform the media industry, before those talks broke down in June. Now, just weeks later, the two sides have reached a tentative agreement to join, four people familiar with the negotiations said.
The deal would still need to be approved by a special committee of Paramount’s board of directors, said the people, who spoke on condition of anonymity as talks resumed.
If they win that approval, the deal would combine Paramount — the parent company of CBS, MTV and Nickelodeon — and Skydance, the up-and-coming movie studio that helped produce “Top Gun: Maverick,” into a new Hollywood behemoth.
A deal would be a changing of the guard in the media world as legacy companies like Paramount struggle with the decline of cable TV and cash-strapped streaming services. Shari Redstone, who controls Paramount through her stake in its parent company, National Amusements, is part of the family that has run the media conglomerate for decades. The new company will instead be backed by big-ticket investors such as private equity firm RedBird and David Ellison, son of Oracle founder Larry Ellison.
It would also end a dramatic saga that has played out for months. Paramount and Skydance entered exclusive negotiations in April only to let them expire in May without reaching a deal. Their talks continued, even when other suitors appeared.
The two finally appeared to be heading toward an agreement in June after a marathon weekend of negotiations. But just as Paramount’s special committee was set to vote on that deal, attorneys for National Amusements emailed Paramount’s special committee to end discussions.
In the weeks that followed, Paramount outlined what an independent future might look like for the company as it navigated a challenging media landscape. He named three executives to succeed Bob Bakish, who stepped down as chief executive in April, through a joint “office of the CEO” role. They said at a recent shareholder meeting that they planned to explore a broadcasting joint venture and cut $500 million in costs as the media giant grappled with about $14 billion in debt.
The company’s shares have fallen more than 16 percent over the past month, as Paramount’s investors remained concerned about its prospects.
Paramount has been exploring a deal despite strong headwinds against traditional media. Critics have argued that the company was too late to broadcast, leaving it small and lagging behind its rivals. They also point to missed opportunities, such as when Mr. Bakish turned down the sale of trophy assets like Showtime and BET to suitors offering billions in recent months.
Skydance and National Amusements resumed their negotiations shortly after a cooling-off period, three of the people said. This latest deal would give Ms. Redstone better financial terms than the previous iteration. National Amusements’ equity would be valued at $1.75 billion, up slightly from $1.7 billion in its last incarnation, three of the people said.
The deal would also give National Amusements a greater degree of protection against potential shareholder lawsuits over the deal. This had been a sticking point in previous negotiations, given considerable shareholder anxiety about the transaction.
The deal is expected to give Paramount a 45-day “go shop” period in which it can talk to other suitors about a possible deal, three of the sources said. Billionaire Barry Diller and his digital media conglomerate, IAC, have expressed interest in National Amusements, as have Edgar Bronfman Jr., the media and finance executive, and Steven Paul, the Hollywood executive best known for his work on “Geniuses.” of Babies”. exclusivity.
Paramount’s board committee will now assess whether these new terms will be palatable enough for shareholders.
