National Amusements, which is the controlling shareholder of Paramount Global, has abruptly stopped talks with Skydance regarding a proposed merger deal. CNBC’s David Faber reported this unexpected development on Tuesday, revealing that National Amusements, owned by Shari Redstone, had reached terms on a merger with a consortium including Skydance, RedBird Capital, and KKR. The deal, awaiting approval from Redstone, came to a sudden halt, leading to a nearly 8% drop in Paramount shares on the same day. Paramount declined to comment on the situation, and representatives from the involved parties did not respond to requests for comment. This turn of events follows a period of uncertainty since discussions around the potential merger began.
Paramount’s Leadership and Strategic Priorities
Just days before National Amusements ceased talks with Skydance, Paramount’s current leadership, known as the “Office of the CEO” comprised of CBS CEO George Cheeks, Paramount Media Networks CEO Chris McCarthy, and Paramount Pictures CEO Brian Robbins, outlined strategic priorities at the company’s annual shareholder meeting. The trio shared plans that included exploring streaming joint venture opportunities, cutting $500 million in costs, and divesting noncore assets. This strategy was presented as an alternative by Redstone in case she chose not to proceed with the sale of Paramount.
Despite the unconventional leadership structure, Redstone expressed support for the team’s ideas and leadership. The future of Paramount, including a potential sale, has been under Redstone’s control. Earlier, Apollo Global Management and Sony expressed interest in acquiring Paramount for $26 billion, but Redstone favored a deal that would keep the company intact. This preference for maintaining the unity of Paramount led to the breakdown of discussions with Apollo and Sony, who planned to separate the movie studio from other business segments.
Implications of the Ceased Merger Talks
The proposed merger with Skydance would have potentially provided Redstone with $2 billion for National Amusements, with Skydance acquiring nearly 50% of class B Paramount shares for $4.5 billion. This deal aimed to reduce Paramount’s debt, with Skydance and RedBird contributing $1.5 billion in cash to aid in this process. The new company formed through the merger was projected to be valued at $8 billion, a significant increase from the initial $5 billion offer. Paramount’s leadership had underlined debt reduction and a return to an investment-grade rating, with the company facing approximately $14.6 billion in long-term debt as of March 31.
The sudden halt in merger talks between National Amusements and Skydance has brought about uncertainty regarding the future of Paramount Global. The shift in focus towards internal strategies and debt reduction highlights the challenges faced by the company in navigating ownership and financial stability in a competitive industry landscape. The decision-making by key stakeholders, including Shari Redstone and the company’s leadership, will significantly impact Paramount’s trajectory in the coming months.
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