Paramount Global’s Stock Price Skyrockets Amid Ongoing Skydance Media Deal Negotiations

Paramount Global’s Stock Price Skyrockets Amid Ongoing Skydance Media Deal Negotiations

Paramount Global shares are soaring as talks of a deal with Skydance Media continue to heat up.

The stock price rose by 15 percent Wednesday, all in the minutes leading up to the market close, after The Wall Street Journal reported that Paramount and its controlling shareholder National Amusements, led by Shari Redstone, have agreed to an exclusive negotiating window with David Ellison’s Skydance in a key step towards a possible sale of the media and entertainment empire controlled by Redstone in a two-stage process. Paramount and Skydance declined to comment on the report.

Bloomberg reported shortly after that there was a “tentative” agreement between the companies on a deal.

Skydance, controlled by the Ellison family, and Paramount, which owns the Paramount film and TV studios, streaming service Paramount+, broadcast network CBS, and such cable channels as Nickelodeon, MTV, BET and Comedy Central, have a long track record of collaborating on such blockbuster film franchises as Mission: Impossible and Top Gun.

The new updates come after Skydance reportedly made a takeover offer for National Amusements earlier this year amid widespread deal chatter swirling around Paramount and its parent company. 

Meanwhile, private equity firm Apollo Global Management recently offered to acquire the conglomerate’s studio arm Paramount Pictures for $11 billion, with the Journal reporting that it had subsequently made a $26 billion bid for the whole company. The conglomerate has also been approached about a sale of BET or a majority stake in it, but has rejected those advances.

Skydance, which was founded in 2010, has offered to acquire privately held National Amusements (NAI), which is controlled by Redstone. The combined company would then buy the publicly traded Paramount.

Redstone is widely understood to prefer selling Paramount Global, the Hollywood giant built by her father Sumner Redstone, who died in 2020, in one piece while maximizing the price tag of a deal. Sumner Redstone had made regional cinema chain National Amusements into a media and entertainment titan via the acquisitions of the likes of Paramount, Viacom, and CBS. NAI owns an equity stake of only about 10 percent in Paramount, but controls around 80 percent of its voting shares.

Shari Redstone, who has run NAI since her father’s death, also serves as non-executive chair of Paramount.

Paramount in its current form was created by the late 2019 re-combination of Viacom and CBS Corp., followed by various asset sales, including the divestiture of publisher Simon & Schuster and its stake in Indian media company Viacom18.

Credit ratings agency S&P Global recently downgraded Paramount’s debt to junk, citing “accelerating declines” in its traditional TV business and uncertainty in streaming. “Paramount will need to execute its plan to substantially improve streaming losses over the next two years to mitigate further downside ratings pressure,” it said.

Its stock has been under pressure amid such industry-wide challenges as cord-cutting. This year, it has lost around 20 percent in market value.

NAI has also faced debt challenges. It agreed to a $125 million strategic investment from BDT & MSD Partners in 2023, using the proceeds to reduce debt and pay back loans.

Skydance was originally called Skydance Productions. Its CEO, David Ellison, is the son of billionaire Oracle co-founder Larry Ellison and the brother of Annapurna Pictures founder Megan Ellison. Beyond the family, Skydance’s investors include private equity firms KKR and RedBird Capital, Chinese entertainment giant Tencent and South Korean media conglomerate CJ ENM. 

Source Reference

Latest stories