Shari Redstone has decisively halted discussions regarding the latest acquisition proposal for Paramount Global from a consortium led by Skydance and RedBird Capital. This move has thrown the future of the entertainment giant into a new phase of uncertainty, as confirmed by sources close to the matter.
A representative from National Amusements, the Redstone-controlled entity that holds the reins of Paramount, stated that the company could not reach mutually acceptable terms with Skydance Media for acquiring a controlling stake in National Amusements Inc. (NAI).
The spokesperson further emphasized that NAI supports the strategic plan recently announced by Paramount’s Office of the CEO. This plan, along with the ongoing efforts of the company’s Board of Directors, aims to explore opportunities to create value for all Paramount shareholders.
Paramount Global’s special committee of the board also weighed in, noting that it did not vote on any potential transaction during its recent meeting. The committee was informed that no agreement had been reached with Skydance Media and that there was no anticipated path forward for this transaction.
According to insiders, Redstone’s insistence on a “majority of the minority” vote, which would allow other Class A shareholders to approve or reject the deal, was a deal-breaker for Skydance. Additionally, the prospect of a regulatory review lasting over a year raised concerns for Redstone, given the operational constraints it would impose on the business.
Redstone is now exploring the possibility of selling NAI to another potential buyer, as reported by The Wall Street Journal. However, Skydance, which had submitted its final offer in April, remains hopeful that other suitors will eventually withdraw.
Skydance had secured approval from Paramount’s independent board committee for a deal that would allow nonvoting shareholders to cash out at $15 per share. The deal also included Skydance acquiring National Amusements for approximately $2 billion.
National Amusements, originally a regional movie theater chain, was transformed into a media powerhouse by Sumner Redstone through acquisitions of Viacom, Paramount, and CBS. Despite owning only about 10% of Paramount’s equity, National Amusements controls around 80% of its voting stock, giving it significant influence over the company.
Shari Redstone has been at the helm since her father’s death in 2020. Paramount’s future has been a subject of intense speculation, with its streaming business losing money, its linear TV business in decline, and its credit rating under threat.
In addition to Skydance, other potential buyers like Apollo and Sony have shown interest in the company. Paramount recently replaced its CEO, Bob Bakish, with a trio of executives in the “Office of the CEO,” who have outlined a vision for the company that includes cost-cutting, divesting non-core assets, and seeking streaming partners.
National Amusements has also faced financial challenges, taking a $125 million strategic investment in May to pay down debt and repay loans. S&P Global downgraded Paramount’s debt to BB+ in March, citing the decline in linear media and the competitive streaming landscape.
With the Skydance deal off the table, Paramount appears to be leaning on its current leadership unless a better offer emerges. The company recently announced that its three co-CEOs would be eligible for enhanced severance if the company is sold.
For months, Shari Redstone had been pushing for a deal with David Ellison’s Skydance Media, despite resistance from then-CEO Bob Bakish and several board members. Investors were concerned that the deal would benefit the Redstone family at the expense of regular shareholders. Redstone eventually dismissed Bakish and four board members, and by late Saturday, the Redstone family and Skydance had agreed on major deal terms.
However, just as the independent board directors were set to formally consider the deal, Redstone announced that the Skydance deal was dead. This reversal was influenced by several factors, including changes to deal terms that would have reduced the money flowing to National Amusements and the family’s desire to be indemnified from costly shareholder lawsuits.
Other suitors have since emerged, with former Seagram and Warner Music executive Edgar Bronfman Jr. and Hollywood producer Steven Paul expressing interest in buying National Amusements. Both have indicated they would pay more than what National Amusements would have received under the Skydance bid.
The Redstone family aims to honor their late patriarch by not selling the company at a low point, anticipating that a better offer will materialize soon. The sale of Paramount would mark the end of an era for the Redstone family, which has long held a cherished position in Hollywood.
Shari Redstone has faced numerous challenges since taking over, including Paramount’s declining stock performance and the downgrade of its credit rating. The company’s decision to cut its dividend in May 2023 further strained relations with shareholders.
After Bakish’s ouster, the new leadership trio crafted a business plan that impressed Redstone and the board. This plan includes $500 million in cost cuts, potential asset sales, and exploring joint ventures for the Paramount+ streaming service.
Despite the challenges, Redstone remains committed to preserving the legacy of her family and restoring Paramount to its former glory. However, the road ahead is fraught with obstacles, and the company’s future remains uncertain.
