Paramount directors support sweetened offer from Ellison’s Skydance

Paramount directors support sweetened offer from Ellison’s Skydance

Unlock the Editor’s Digest for free

A special committee of Paramount directors has recommended a sweetened acquisition offer from Skydance Media, people briefed on the matter said, leaving the final decision over whether to sell the storied Hollywood company in the hands of controlling shareholder Shari Redstone.

The future of Paramount, the owner of legendary titles such as The Godfather and Titanic, has been in flux for the past several months. Redstone has been negotiating with Skydance, the production group founded by billionaire David Ellison, over a complex deal to offload the company, which has received competing interest from Apollo, the US private equity group, and Sony, the Japanese media company.

Skydance, which is backed by US private equity groups RedBird and KKR, has offered to decrease the payout to Redstone’s National Amusements (NAI) in favour of a bigger payout for the rest of Paramount’s investors, the people said. The move is aimed at winning over common shareholders, some of whom previously protested that the Skydance offer favoured the Redstone family. 

A special committee representing shareholder interests, tasked with making a recommendation to the board, has approved the Skydance deal, according to two people familiar with the matter. 

Paramount’s board, which Redstone chairs, will vote on the Skydance deal at the company’s June 4 annual meeting. 

Representatives for Skydance, Sony and National Amusements declined to comment. Paramount representatives could not be reached.

If Redstone signs off, stewardship of one of Hollywood’s most storied assets will change hands from her family, which has controlled Paramount for three decades, to another billionaire family — the Ellisons, backed by Larry Ellison, Oracle’s cofounder and David’s father.

The Paramount saga has been chaotic and prolonged, with the company’s chief executive and several board members abruptly exiting in the middle of the bidding process. 

Paramount has a dual-class shareholding structure, which gives National Amusements nearly 80 per cent of its voting rights with only 10 per cent equity ownership. Common shareholders have little chance of swaying the final decision but could try to fight in court a deal they deem unfair.

Apollo and Sony have presented a joint rival bid worth $26bn, including about $13.4bn in net debt. This offer is non-binding and could face regulatory hurdles as US antitrust officials have signalled opposition to further consolidation in the industry. 

Redstone has not made a final decision, although she has long preferred a deal with Ellison, according to multiple people briefed on the matter.

Media executives close to Redstone have told the FT that they have advised her to consider keeping Paramount independent by drastically revamping its senior management. 

Most Hollywood insiders are sceptical about a deal that involves Apollo, because they fear it would end up breaking the company into pieces and cutting many jobs. Apollo has pushed back at such criticism.

Another option for Redstone is to sell just National Amusements and walk away, which would give her a payout without having to worry about managing Paramount in a challenging environment, where tech giants such as Netflix and Amazon have permanently disrupted the incumbents.

Source Reference

Latest stories