The sides have made it official: David Ellison’s Skydance Media has set a deal with Paramount Global that calls for Ellison to become chairman and CEO of an enhanced Paramount while former NBCUniversal CEO Jeff Shell will take operational reins as president.

“In 1987, my father, Sumner Redstone, acquired Viacom and began assembling and growing the businesses today known as Paramount Global,” Shari Redstone said in announcing the pact late Sunday. “He had a vision that “content was king” and was always committed to delivering great content for all audiences around the world. That vision has remained at the core of Paramount’s success and our accomplishments are a direct result of the incredibly talented, creative, and dedicated individuals who work at the company. Given the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king. Our hope is that the Skydance transaction will enable Paramount’s continued success in this rapidly changing environment. As a longtime production partner to Paramount, Skydance knows Paramount well and has a clear strategic vision and the resources to take it to its next stage of growth. We believe in Paramount and we always will.”

The complicated three-way transaction that will take Paramount, CBS and the former Viacom assets out of the hands of the Redstone family for the first time in decades. The transaction still faces a complicated process of regulatory approvals in part because the deal involves Paramount Global’s television stations, which trigger the involvement of the FCC. Skydance and its partners will invest more than $8 billion in an effort to reinvigorate aspects of the company. Skydance said the deal has an enterprise value of $28 billion, with Skydance itself valued at $4.75 billion.

Ellison clinched the agreement with late Sunday after more than 10 months of pursuing Redstone and her controlling share in Paramount Global, held by National Amusements. The deal is expected to close by the first half of 2025. Ellison founded Skydance in 2010 as a film production and financing vehicle. It’s since expanded into TV production and gaming. Ellison’s father, software billionaire Larry Ellison, is also participating in the transaction along with other private investors.

As part of the deal, Paramount Global will have the right to shop around for matching or superior offers for a 45-day period before completing the deal with Skydance. The newly engaged partners sought to downplay that option, which is designed to provide Redstone cover for lawsuits from common shareholders. A previous interation of the Skydance-Paramount deal that broke down last month offered less advantageous terms for shareholders not named Redstone.

Under the new agreement, Skydance and its private equity partners including RedBird Capital vow to invest $6 billion to reinvigorate the company that owns Paramount Pictures, CBS, Nickelodeon, Paramount+ and numerous other studio and content assets. The new deal offers common shareholders about $15 a share, 48% premium to where the stock has traded in recent days and about $2 more than the previous pact. Redstone will receive $2.4 billion for her preferred voting shares, held by National Amusements, that give her 77% of the voting power in the company compared to about 10% of its equity. Skydance and RedBird and others will also kick in more cash to help tame Paramount Global’s significant $14 billion-plus debt load.

If the deal is completed, the transaction will leave Skydance with 70% of the equity in Paramount and ownership of all Class A shares.

Although Paramount has been seen as on the block for years, that ticking clock of the 45-day window is likely to bring out opportunistic contenders. Already, media adjacent-moguls including Barry Diller and Edgar Bronfman Jr. have indicated interest in a deal to buy out National Amusements.

The announcement confirms that the agreement includes “a 45-day go-shop period during which the Special Committee of Paramount’s Board of Directors, with the assistance of its financial advisors, will be permitted to actively solicit and evaluate alternative acquisition proposals. There can be no assurance that this process will result in a superior proposal, and Paramount does not intend to
disclose developments with respect to the go-shop process unless and until it determines such disclosure is appropriate or is otherwise required.”

Assuming the transaction is completed, it’s unclear if the company will stick with Paramount Global or craft a new corporate moniker that incorporates Skydance. Ellison vowed to energize the business that has struggled amid Hollywood’s transition from analog to digital distribution models.

“This is a defining and transformative time for our industry and the storytellers, content creators and financial stakeholders who are invested in the Paramount legacy and the longevity of the entertainment economy,” Ellison said. I am incredibly grateful to Shari Redstone and her family who have agreed to entrust us with the opportunity to lead Paramount. We are committed to energizing the business and bolstering Paramount with contemporary technology, new leadership and a creative discipline that aims to enrich generations to come.”

The Paramount deal is a major score for Cardinale, who has been gradually growing his profile as an investor in media, tech and sports. He vowed that the newly enhanced Paramount would become “the pace car” for how contemporary media giants should operate.

“The recapitalization of Paramount and combination with Skydance under David Ellison’s leadership will be an important moment in the entertainment industry at a time when incumbent media companies are increasingly challenged by technological disintermediation,” Cardinale said. “As one of the iconic media brands and libraries in Hollywood, Paramount has the intellectual property foundation to ensure longevity through this evolution – but it will require a new generation of visionary leadership together with experienced operational management to navigate this next phase. RedBird is making a substantial financial investment in partnership with the Ellison family because we believe that the pro forma company under this leadership team will be the pace car for how these incumbent legacy media businesses will need to be run in the future.”

When negotiations broke off last month, longtime Paramount (and its Viacom predecessor) board member Charles Phillips Jr. emerged as a voice against the deal, to Skydance’s chagrin. The revised terms allowed Paramount’s special board committee overseeing the M&A process to unanimously endorse the sale on behalf of all shareholders. Phillips headed the special committee.

“We are pleased to have reached an agreement that we believe delivers to Paramount stockholders both immediate value and future upside opportunity,” Phillips said. “The Special Committee, with the assistance of independent financial and legal advisors, conducted a thorough review of actionable potential transactions to drive value for our stockholders. In addition to economic value, the Special Committee took into account the certainty of closing and regulatory approvals. Following extensive negotiations with Skydance, we believe this proposed transaction will position Paramount for success in a rapidly evolving industry landscape. Upon closing, it will deliver immediate cash consideration at a premium to both the minority Class A and Class B stockholders, who will also benefit from what we believe to be considerable upside through continued equity participation in New Paramount.”

Article originated in: Variety