Don Chmielewski
(Reuters) – Paramount Global Chairman Shari Redstone is unhappy with Skydance Media’s reduced bid for the family’s majority stake in the company, opening the door for rival bidders to make their case, two sources familiar with the matter told Reuters on Wednesday.
Skydance CEO David Ellison has been trying to strike a deal with Paramount for months and has cut his original $2.5 billion offer for National Amusements, which owns the Redstone family’s stake in Paramount, to provide additional cash, according to one source familiar with the matter. funds to the company’s shareholders who do not have voting rights. process.
In a later proposal submitted last week, Ellison created more money for shareholders by lowering the valuation of the Skydance merger from $5 billion to $4.75 billion, according to this source.
Redstone was unhappy with the revaluation, which created an opportunity for others interested in buying the national entertainment, two sources said. Among them, Hollywood producer Stephen Paul has begun lobbying the Redstone family to consider his bid to sell Skydance, one of the sources said. Although one source added that Redstone would always be required to consider all national entertainment offers.
Both sources spoke on condition of anonymity.
Representatives for Skydance and Redstone declined to comment. A spokesman for Paramount’s special committee, which assessed the company’s options, also declined to comment.
Paramount shares fell 4.6% in late trading Tuesday. The company’s fortunes have declined as its traditional TV business has declined and the video streaming service it launched to attract audiences has yet to recover lost revenue.
The latest twist in deal negotiations comes amid Paramount’s annual shareholder meeting. Addressing shareholders, Paramount’s co-CEOs laid out a restructuring plan that includes annualized cost cuts of $500 million, potential asset sales and a possible joint venture or other partnership for the Paramount+ streaming service.
Paramount’s new triumvirate is CBS President and CEO George Cheeks; Chris McCarthy, President and CEO of Showtime/MTV Entertainment Studios; and Paramount Pictures President and CEO Brian Robbins – have led the company since the April departure of former boss Bob Bakish, who left the company amid growing tensions with Shari Redstone, Paramount’s controlling shareholder.
Paramount said it rescheduled a staff meeting scheduled for Wednesday to June 25, citing ongoing rumors about a potential deal.
“We want to be able to speak with you as openly and transparently as possible,” the company’s co-CEOs told employees in a memo seen by Reuters. “By moving the date, we hope to do just that.”
REDSTONE APPROVAL
Redstone supported the co-CEOs and their plan to better leverage the company’s content wealth and cut costs to strengthen its balance sheet.
“Each of them are accomplished, respected leaders in our company, in our industry, and have been behind our greatest successes for many years,” she said Tuesday.
The shareholder meeting marked the first time the three executives publicly addressed investors as a group.
Paramount’s market value has fallen by about $18 billion since December 2019, when Redstone reunited the two halves of the family’s media empire, CBS and Viacom.
One source close to Redstone said the sale of the media conglomerate built by the late Sumner Redstone from the National Amusements theater chain founded by his father Michael was an emotional process that will take some time to evaluate.
In April, Paramount entered into exclusive merger negotiations with Skydance Media, but allowed that period of exclusivity to expire as it evaluated a competing non-binding offer letter from Sony (NYSE:) Pictures Entertainment and Apollo Global Management (NYSE:).
Under Skydance’s latest offer, Paramount would acquire the independent studio in an all-stock deal valued at $4.75 billion, one person familiar with the negotiations said.
Skydance and its deal partners, RedBird Capital and KKR, will provide Paramount with at least $1.5 billion in new capital, which will be used to pay down debt, and will offer to acquire 40% of Paramount’s Class B non-voting shares for $15 a share, the source said. , who spoke on condition of anonymity.
As part of the related deal, Skydance will acquire privately held National Amusements, which owns cinemas in the US, UK and Latin America and owns 77% of Paramount’s Class A voting shares, representing the Redstone family’s majority stake in the company.
The deal with National Amusements, worth more than $2 billion, will give Skydance CEO Ellison voting control of the larger media company, setting the stage for a merger.