By Dawn Chmielewski
(Reuters) -Paramount Global Chairman Shari Redstone is unhappy with Skydance Media’s reduced bid for the family’s controlling stake in the company, opening the door for rival bidders to plead their case, two sources familiar with the matter said were with the case on Wednesday to Reuters.
After a months-long search for a deal with Paramount, Skydance CEO David Ellison cut his initial $2.5 billion bid for National Amusements, which owns the Redstone family’s Paramount shares, to provide additional cash to the non-voting shareholders of the company, according to a source familiar with the process.
In a subsequent offer filed last week, Ellison created more money for shareholders by lowering Skydance’s merger valuation from $5 billion to $4.75 billion, that source said.
Redstone was unhappy with that revaluation, according to the two sources, which created an opportunity for others interested in buying National Amusements. Among them, Hollywood producer Steven Paul began lobbying the Redstone family to consider his offers for a sale to Skydance, one of the sources said. Although one of the sources added that Redstone would always have been obliged to consider all offers for national entertainment.
Both sources spoke on condition of anonymity.
Spokespeople for Skydance and Redstone declined to comment. A spokesperson for a Paramount special committee that evaluated options for the company also declined to comment.
Shares of Paramount fell 4.6% in late Tuesday trading. The company’s fortunes have waned as its traditional television business has declined, while the streaming video service it launched to capture audiences has yet to make up for lost revenue.
The latest twist in the deal talks came with Paramount’s annual shareholder meeting in the background. Addressing shareholders, Paramount’s co-CEOs laid out a restructuring plan that includes $500 million in annual cost cuts, potential asset sales and a possible joint venture or other partnerships for its Paramount+ streaming service.
Paramount’s new triumvirate – CBS president and CEO George Cheeks; Chris McCarthy, president and CEO of Showtime/MTV Entertainment Studios; and Brian Robbins, president and CEO of Paramount Pictures, have led the company since former boss Bob Bakish left in April amid growing tensions with Shari Redstone, Paramount’s controlling shareholder.
Paramount said it has rescheduled Wednesday’s planned town hall for June 25, citing continued speculation about a potential deal.
“We want to be able to talk to you with as much candor and transparency as possible,” the company’s co-CEOs told employees in a note 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 wealth of content and reduce costs to strengthen the balance sheet.
“They are each experienced, respected leaders within our company, in our industry, and they have been behind our greatest successes for years,” she said Tuesday.
The shareholder meeting was the first time the three executives publicly addressed investors as a group.
Paramount has lost about $18 billion in market value since December 2019, when Redstone reunited 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, of the National Amusements theater chain founded by his father Michael, has been an emotional process and will take some time to evaluate.
In April, Paramount entered into exclusive merger talks with Skydance Media, but let that period of exclusivity lapse as it evaluated a competing, non-binding offer letter from Sony Pictures Entertainment and Apollo Global Management.
Under the terms of Skydance’s latest offer, Paramount would acquire the independent studio in an all-stock deal valued at $4.75 billion, according to a person familiar with the negotiations.
Skydance and its deal partners, RedBird Capital and KKR, would provide Paramount with at least $1.5 billion in new capital to use to pay down debt, and offer to purchase 40% of Paramount’s non-voting Class B stock for $15 per share, the source said. , who spoke on condition of anonymity.
In a related transaction, Skydance would acquire privately held National Amusements, which owns movie theaters in the United States, United Kingdom and Latin America, and owns 77% of Paramount’s Class A voting stock, which would reduce the Redstone family’s controlling interest in the company represents.
The more than $2 billion deal for National Amusements would give Skydance CEO Ellison voting control of the larger media company, paving the way for the merger.
(Reporting by Dawn Chmielewski in Los Angeles; additional reporting by Noel Randewich in San Francisco; Editing by Jonathan Oatis)
