David Ellison’s Skydance Media, in collaboration with financial backers RedBird Capital Partners and KKR & Co., is reportedly exploring a deal to take the entirety of Paramount Global private, according to sources familiar with the matter. The film and TV studio, led by Ellison, has engaged in preliminary discussions with Paramount, though full due diligence has not yet commenced. Insiders have requested anonymity as the deal talks remain private.
National Amusements Merger Contingency
Skydance’s ongoing collaboration with private equity firms RedBird Capital Partners and KKR & Co. involves a deal to acquire National Amusements, owned by Shari Redstone, which holds a controlling 77% of Paramount’s voting stock. The potential merger structure indicates a comprehensive privatization of the larger media company, Paramount Global.
Shifting Media Landscape and Paramount’s Position
Shari Redstone, considering a sale amidst the evolving media landscape favoring streaming over traditional TV, oversees a profitable business in Paramount Global. However, Paramount Global is comparatively smaller than streaming giants like Netflix, YouTube, Apple, and Amazon. These larger platforms boast more substantial balance sheets to afford diverse sports and entertainment content.
Uncertain Future and Financial Considerations
While discussions are ongoing, no acquisition is guaranteed, and the talks could face potential hurdles. The acquisition’s financial feasibility is a crucial factor, with Paramount having a market capitalization of $8.2 billion and approximately $15 billion in debt. Skydance would require additional capital for the acquisition, with potential funding from private equity partners and David Ellison’s father, Larry Ellison, the billionaire co-founder of Oracle.
Skydance has expressed disinterest in a partial deal that involves acquiring National Amusements without taking control of the entire Paramount. Such a limited deal would not address Paramount’s challenges as a publicly traded company, including managing the Paramount+ streaming service’s losses and overseeing declining linear cable assets such as MTV, VH1, Comedy Central, and Nickelodeon.
Other Players in Consideration
Warner Bros. Discovery has also initiated preliminary discussions about acquiring Paramount Global, providing an alternative scenario. In the event that Shari Redstone opts for Skydance, one motivating factor could be her apprehension that Warner Bros. Discovery might prefer merging with Comcast’s NBCUniversal.
As discussions continue, industry observers await further developments to see if Skydance’s interest in taking Paramount Global private will materialize. The media landscape’s rapid evolution and the dynamics of potential mergers and acquisitions in the entertainment industry remain key factors shaping these negotiations. Spokespeople for RedBird, Skydance, Paramount Global, and National Amusements have refrained from providing comments on the matter.