(Bloomberg) — Independent film and television producer Skydance Media has reached a preliminary agreement to buy Shari Redstone’s National Amusements Inc. and merge with Paramount Global, the parent company of CBS and MTV, according to a person familiar with the matter.
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National Amusements, the family-owned company that controls Paramount, will submit the deal to a special committee of Paramount directors for review, said the person, who asked not to be identified discussing an unannounced deal.
The deal follows the collapse of negotiations between Skydance and National Amusements last month. The two companies reconnected last week and discussions resumed Tuesday, the person said.
The new terms include a higher valuation for National Amusements and stricter provisions to indemnify the Redstones’ company against litigation that could arise from the deal, the person said. The sellers have 45 days to seek better offers, another person familiar with the matter said.
Paramount and Skydance, which are run by Oracle Corp. co-founder Larry Ellison’s son David Ellison, declined to comment. National Amusements did not respond to requests for comment. The Wall Street Journal reported the deal earlier Tuesday, saying terms of the deal were not known.
A deal could be announced in the coming days, the person said, although there is still a possibility the deal could fall through.
Paramount’s non-voting shares rose as much as 10% to $11.83 in extended trading.
In Ellison’s previously proposed deal, he and partners including RedBird Capital Partners and KKR & Co. proposed buying National Amusements for $2.25 billion and injecting $1.5 billion into Paramount’s balance sheet to pay down debt. The film and television company’s long-term borrowings exceed $14 billion.
The Ellison group reportedly contributed an additional $4.5 billion to buy Paramount stock. Up to 50% of Paramount’s nonvoting Class B shareholders were to receive $15 per share and all non-Redstone family Class A shareholders were to receive $23 per share, people familiar with the discussions said at the time.
The investments represent a significant potential lifeline for Paramount, which has struggled to compete as consumers abandon movie theaters and cable TV in favor of streaming.
The company reported a net loss of $554 million, or 87 cents per share, in the first quarter.
Earlier Tuesday, Bloomberg News reported that Paramount was in exclusive talks to sell its Black Entertainment Television network to buyers including BET CEO Scott Mills and Chinh Chu, who runs New York-based private equity firm CC Capital.
The group has discussed an offer of $1.6 billion to $1.7 billion, according to people familiar with the matter who asked not to be named, revealing information that is not public.
–With assistance from Hannah Miller and Thomas Buckley.
(Updated with details on conditions in fourth paragraph.)
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