Paramount Lets Skydance Exclusivity Window Expire With No Deal

The move comes as Sony and Apollo have submitted a joint $26 billion all-cash offer

Skydance Media CEO David Ellison and National Amusements President Shari Redstone
Skydance Media CEO David Ellison and National Amusements President Shari Redstone (Getty Images / Illustration by TheWrap)

Paramount Global’s special committee of independent directors has informed Skydance Media that it will let the exclusivity window on the two parties’ merger discussions expire with no deal ahead of a Friday evening deadline, an individual with knowledge of the matter told TheWrap.

The development signals that a deal between the two parties is unlikely to happen, and for the moment Paramount will remain an independent company in a challenging environment.

David Ellison’s Skydance has been in talks about a potential two-step deal that would see the company acquire Paramount through controlling shareholder Shari Redstone’s majority stake in National Amusements, which owns 77% of the media conglomerate’s voting stock. If it moved forward, the second step would see Skydance and Paramount merge to create a combined company valued at around $5 billion.

Representatives for Paramount, the special committee and Skydance declined to comment. The New York Times was the first to report the development.

Earlier this week, Skydance submitted a revised, sweetened offer — saying it would add a $3 billion cash injection and premium for non-voting class B shares  — in an effort to assuage minority shareholders’ concerns about the bid prioritizing Redstone at the expense of everyone else and diluting the value of their own holdings.

Notable investors have warned they could pursue litigation if the Skydance deal or any other bid does not adequately benefit shareholders. Those investors include Ariel Investments’ John Rogers Jr. and GAMCO Investors Inc. chairman and CEO Mario Gabelli.

“Shari finally recognized she didn’t want to be in years of litigation,” the individual told TheWrap Friday.

Skydance, which is valued at about $4 billion and has been co-producer with Paramount on projects including “Top Gun: Maverick,” began kicking the tires on Paramount’s assets in December.

Sony Pictures Entertainment and Apollo Global Management have also submitted a non-binding, joint $26 billion all-cash offer for Paramount. That deal would see Sony take a majority stake and operational control, while Apollo would have a minority stake. But such a deal would likely face regulatory scrutiny due to limitations surrounding foreign ownership.

Any deal must be approved by an independent special committee of Paramount’s board. Last month, four members of the board — including three who were on the special committee — said they would not seek reelection at Paramount’s June 4 annual meeting.

An individual familiar with Redstone’s thinking told TheWrap that she is open to finding a deal in the best interests of Paramount shareholders and supports the committee reviewing the Sony-Apollo bid.

Paramount could choose to go it alone. Following the resignation of CEO Bob Bakish last week, the company created an Office the CEO comprised of CBS CEO and president George Cheeks, Paramount Media Networks CEO and president Chris McCarthy and Paramount Pictures and Nickelodeon CEO and president Brian Robbins. The group is in the process of creating a long-term strategic plan.

“It’s a really difficult, challenging time,” Cheeks said during a news briefing with CBS Entertainment president Amy Reisenbach this week. “But I think what’s good about this team is that we all locked arms and said, ‘We can only control what we can control.’ What we can control is helping to develop great shows, hit shows and being number one…It’s just amazing to me how well we’ve all aligned and come together and focused on what we do every day.”

Paramount shares, which closed at $12.88 per share on Friday, are up more than 2% in after-hours trading. The company has $14.6 billion in long-term debt and reported a market capitalization of $9.05 billion as of Friday’s close.


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