National Amusements Inc. has decided to end merger talks with Skydance Media, which would have involved entertainment giant Paramount Global. This decision comes after months of negotiations that ultimately did not result in an agreement. National Amusements, controlled by Shari Redstone, who also has a majority stake in Paramount Global, had initially agreed on financial terms for the merger. Key players in this potential deal included private equity firms RedBird Capital and KKR. Following the announcement, Paramount shares dropped nearly 8% on Tuesday.
In an official statement on Tuesday, National Amusements acknowledged that they were unable to finalize terms with Skydance Media. They thanked Skydance for their efforts over the past few months and confirmed that their collaborative production with Paramount would continue.
Representatives from National Amusements also expressed their support for the strategic plan announced by Paramount’s Office of the CEO. They reiterated their commitment to exploring opportunities that would enhance value for all Paramount shareholders. Paramount declined to comment on the situation, and representatives from Skydance and RedBird have not responded to requests for comments.
While financial terms were agreed upon, other conditions and expectations caused disagreements. One sticking point was Redstone and the special committee’s demand for a majority of the minority vote, which the Skydance consortium found unacceptable. The consortium also blamed the collapse of negotiations on Redstone’s reluctance to part with a family asset and her desire for a larger sum for National Amusements. Additionally, negative remarks about David Ellison by Paramount board member Charles Phillips contributed to the deal’s failure.
Looking ahead, Paramount’s executive leadership, known as the “Office of the CEO,” has outlined strategic plans should the company remain unsold. This leadership structure, including CBS CEO George Cheeks, Paramount Media Networks CEO Chris McCarthy, and Paramount Pictures CEO Brian Robbins, was established after former CEO Bob Bakish stepped down. Their strategy involves exploring streaming joint venture opportunities, cutting $500 million in costs, and selling non-core assets.
Redstone, maintaining full control over Paramount, is open to considering external offers for National Amusements. In May, Apollo Global Management and Sony showed interest in acquiring Paramount for $26 billion. However, Redstone favored a deal that would preserve the company’s integrity, while Apollo and Sony intended to disassemble Paramount, separating its film studio division from other parts of their business.
Under potential terms, Redstone would have received $2 billion in cash for National Amusements. Skydance would have acquired nearly 50% of class B Paramount shares at $15 per share, totaling $4.5 billion, giving shareholders equity in the new company. Additionally, Skydance and RedBird pledged $1.5 billion in cash to help reduce Paramount’s debt.
Paramount’s three leaders emphasized the importance of reducing debt and restoring the company’s investment-grade rating. Earlier this year, Paramount was downgraded to junk status, with its long-term debt at approximately $14.6 billion as of March 31.
