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Paramount Global will pursue merger with Skydance Media

The decision comes despite an offer from Apollo Global Management to buy the company for $26 billion.

The decision comes despite an offer from Apollo Global Management to buy the company for $26 billion.

The front of the Paramount Pictures studios in Los Angeles, California. (Stock image by Hannah Wernecke via Unsplash)
The front of the Paramount Pictures studios in Los Angeles, California. (Stock image by Hannah Wernecke via Unsplash)

The board of directors at Paramount Global have agreed to enter into exclusive discussions with Skydance Media over a proposed merger of the two businesses, according to a report published this week.

The report, offered by the Wall Street Journal and its anonymous sources, said Paramount will stop entertaining offers from other suitors for at least a month while it irons out details of a proposed merger with Skydance.

In January, Skydance was named as one of the parties interested in acquiring some or all of Paramount. At the time, financial news outlet Reuters said the all-cash deal proposed by Skydance would involve a handful of other players, including China-based Tencent and RedBird Capital Partners.

Apollo stepped in with an offer of its own, pledging $11 billion for Paramount’s film and television studio as part of a deal that would exclude other business units like the CBS broadcast network, amusement parks and cable TV channels.

Apollo upped its offer to $26 billion over the weekend, a move that would see the hedge fund acquire all of Paramount’s businesses for a mixture of cash and debt.

The Paramount board selected Skydance over Apollo over concerns as to how the latter would finance its deal, according to unnamed sources cited by the Journal. The board did not appear to entertain an offer from Byron Allen, the comedian-turned-media mogul who wanted to acquire Paramount’s linear channels for Allen Media Group.

Shari Redstone, the controlling shareholder of Paramount parent company National Amusements, has been in discussion with Skydance founder and CEO David Ellison about acquiring her stake in the business since last year, the Journal said.

The sale of Paramount comes less than five years after CBS Corporation merged with Viacom to form the present-day Paramount Global, which includes streaming platform Pluto TV and certain international television and film assets like Britain’s Channel 5 and Australia’s Network 10.

It isn’t clear what the long-term future of those assets will be if Skydance is able to acquire Paramount.

Paramount has faced external pressure from investors to reduces its expenses and debt load and maximize revenue and profits from its film studio, television networks and amusement parks in the post-coronavirus pandemic era.

Like other companies, Paramount spent billions of dollars in pursuit of scale for its direct-to-consumer streaming business, called Paramount Plus with Showtime, which quickly built up its original film and television library in an effort to court subscribers.

The business didn’t scale as rapidly as some investors would have liked. That, coupled with ongoing softness in the television advertising market and a limited number of blockbuster film releases over the years, has forced Paramount to engage in various strategies to reduce certain operational expenditures.

Early last year, Paramount eliminated a number of creative positions at its Nickelodeon subsidiary as part of a broader restructuring of its television business, sources told The Desk. The layoffs impacted less than 100 workers.

Last May, Paramount executed another round of layoffs that saw its cable network staff reduced by 25 percent. As part of the job cuts, Paramount closed down its famed MTV News division.

Earlier this year, Paramount issued more pink slips that impacted 800 workers across its global footprint. The job cuts impacted workers at CBS News, local CBS-owned broadcast stations, Showtime, Paramount Plus, Pluto TV, Paramount Pictures and Paramount’s cable network division.

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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 10 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
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