June 22, 2024

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Paramount-Skydance talks alternate with competing bidders pressing their case

Paramount-Skydance talks alternate with competing bidders pressing their case

By Don Chmielewski

(Reuters) – Paramount Global Chairman Shari Redstone is unhappy with Skydance Media’s reduced offer for the family’s controlling stake in the company, two sources familiar with the matter told Reuters on Wednesday, opening the door for rival bidders to make their case.

Over the course of months of pursuing a deal with Paramount, Skydance CEO David Ellison lowered his initial $2.5 billion offer for National Amusements, which owns the Redstone family’s stake in Paramount, to provide additional cash to the company’s shareholders who were not entitled to… They get to vote, according to a source familiar with the process. .

In a follow-up offer made last week, Ellison created more money for shareholders by lowering Skydance’s valuation for the merger to $4.75 billion from $5 billion, according to that source.

Redstone was dismayed by this revaluation, according to the two sources, creating an opportunity for others interested in buying National Amusements. One of the sources said that among them was Hollywood producer Steven Paul, who began pressuring the Redstone family to consider his offers regarding the sale to Skydance. Although one source added that Redstone was always obligated to consider all offers for the national cabaret.

The two sources spoke on condition of anonymity.

Spokespeople for Skydance and Redstone declined to comment. A spokesman for Paramount’s special committee, which is evaluating the company’s options, also declined to comment.

Paramount shares were down 3.6% Tuesday afternoon. The company’s fortunes have dwindled as its traditional TV business declined, while the video streaming service it launched to attract audiences has yet to recover lost revenue.

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The latest development in deal talks came with Paramount’s annual shareholders meeting in the background. In addressing shareholders, Paramount’s co-CEOs rolled out a restructuring plan that includes $500 million in annual cost reductions, potential asset sales and a possible joint venture or other partnerships for the Paramount+ streaming service.

The new Paramount trio – CBS Chairman and CEO George Cheeks; Chris McCarthy, President and CEO, Showtime/MTV Entertainment Studios; and Paramount Pictures Chairman and CEO Brian Robbins – have led the company since the April exit of former Chairman Bob Bakish, who left amid growing tensions with Shari Redstone, Paramount’s controlling shareholder.

Redstone endorsement

Redstone endorsed the co-CEOs and their plan to better leverage the company’s content wealth and cut costs to strengthen its balance sheet.

“They are experienced and respected leaders within our company, in our industry, and have been behind our greatest successes for years,” she said Tuesday.

The shareholder meeting was the first time the three executives had publicly addressed investors as a group.

Paramount has lost about $18 billion in market value since December 2019, when Redstone reunited the two halves of the family’s media empire, CBS and Viacom.

A source close to Redstone said the sale of a media conglomerate built by the late Sumner Redstone, from the National Amusements theater chain founded by his father Michael, was an emotional process and would require some time to evaluate.

In April, Paramount entered into exclusive merger talks with Sky Dance Media, but allowed that exclusivity to lapse as it evaluated a competing non-binding offer letter from Sony Pictures Entertainment and Apollo Global Management.

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Under the terms of Skydance’s latest offer, Paramount will acquire the independent studio in an all-stock deal worth $4.75 billion, according to a person familiar with the negotiations.

Skydance and its partners in the deal, RedBird Capital and KKR, will provide Paramount with at least $1.5 billion in new capital to use to pay down debt, and are offering to buy 40% of Paramount’s non-voting Class B shares at a price of $15, the source said. For the stock. , who spoke on condition of anonymity.

In a 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 controlling interest in the company.

The deal worth more than $2 billion for National Amusements will give Skydance CEO Ellison voting control over the larger media company, paving the way for the merger.

(Reporting by Don Chmielewski in Los Angeles; Additional reporting by Noel Randewich in San Francisco; Editing by Jonathan Oatis)