David Ellison’s Skydance Media and its financial backers are considering a deal to take all of Paramount Global private.
Skydance, the film and TV studio led by Ellison, has shared preliminary details with Paramount, according to sources who requested anonymity due to the confidential nature of the discussions.
Skydance is collaborating with private equity firms RedBird Capital Partners and KKR & Co. on a potential acquisition of National Amusements, the holding company owned by Shari Redstone. National Amusements controls 77% of Paramount’s voting stock.
However, this potential acquisition is dependent on a merger with Paramount, with the likely outcome being a full privatization of the larger media company, according to the sources.
Redstone is contemplating a sale as the media industry transitions from traditional TV to streaming.
Despite its profitability over decades, Paramount Global is smaller compared to major streamers like Netflix, YouTube (owned by Google), Apple, and Amazon, which have larger financial resources for acquiring sports and entertainment content.
There is no certainty that an acquisition will occur, and negotiations could collapse. Paramount Global’s shares increased by nearly 7% in premarket trading on Thursday.
It remains unclear whether Redstone would seek a different premium for selling National Amusements compared to what other Paramount Global shareholders would receive.
To acquire Paramount, Skydance would need additional funding, as Paramount has a market capitalization of $8.2 billion and approximately $15 billion in debt.
Some of this capital might come from Skydance’s private equity partners and Larry Ellison, the billionaire co-founder of Oracle and David Ellison’s father.
Skydance has not yet sought external financing, as it has not decided whether to proceed with the deal, according to the sources.
Skydance is not interested in a transaction that would involve acquiring only National Amusements without taking over all of Paramount.
Such a deal would give Skydance control of Paramount but would not address the challenges Paramount faces as a public company, including the costly Paramount+ streaming service and declining linear cable assets like MTV, VH1, Comedy Central, and Nickelodeon.
Warner Bros. Discovery has also had initial discussions about acquiring Paramount Global, according to sources familiar with the situation.
If Redstone were to sell to Skydance, one factor could be her concern that Warner Bros. Discovery might prefer to merge with Comcast’s NBCUniversal, one source noted.
Puck initially reported Skydance’s interest in acquiring National Amusements.
It was reported last week that Skydance was exploring a two-part deal involving a merger with National Amusements. Bloomberg first reported the preliminary exchange of company information.
