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July 25, 2024

Skydance Media Explores Acquiring Paramount Global from National Amusements

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Jan 25, 2024

David Ellison, founder and CEO of Skydance Media, has made a preliminary offer to acquire Paramount Global from National Amusements, the holding company controlled by Shari Redstone and her family. If successful, the deal would make Skydance a major Hollywood player and give Ellison control over the famed Paramount studios.

Skydance Looks to Become an Entertainment Powerhouse

According to sources familiar with the matter, Ellison approached National Amusements in recent weeks about a potential deal for Paramount Global, the parent company of Paramount Pictures, CBS, Showtime Networks and other entertainment assets. The talks are said to still be in the early stages.

While financial terms of Ellison’s offer haven’t been disclosed, analysts estimate Paramount Global could be worth $25-30 billion or more given the value of its IP catalog and franchises. Skydance itself was recently valued at around $4 billion after a capital raise last year.

Acquiring Paramount would transform Skydance into a diversified entertainment powerhouse with film, TV and streaming operations under major brands like Paramount Pictures, CBS, Showtime and Paramount+. It would also give Ellison the infrastructure and IP library to compete more aggressively with giants like Disney, Netflix and Warner Bros. Discovery.

As the producer of major film franchises like Mission: Impossible, Top Gun and Terminator, Ellison has proven his ability to manage premium content. But Skydance remains primarily a film and TV production company, without its own distribution and marketing arms. Taking over Paramount would give Skydance that critical downstream infrastructure.

Background on Skydance Media

Founded in 2010 by David Ellison, son of billionaire Oracle founder Larry Ellison, Skydance Media started as a moviemaking upstart focused on event films with franchise potential. It found early success co-producing tentpole titles like Mission: Impossible – Ghost Protocol, Star Trek Into Darkness, World War Z and Jack Reacher.

Powered by steady investment from its founder, Skydance has expanded into animation film and television production in recent years. It has emerged as one of Hollywood’s top independent studios, racking up over $7 billion in global box office. Recent Skydance features include Top Gun: Maverick and The Adam Project, while its TV division produces Emmy-winning series like Grace and Frankie.

Buying Paramount would take Skydance into a new stratosphere, making it a diversified media conglomerate spanning film, TV, streaming and broadcasting.

Motivations Behind the Deal

Acquiring Paramount Global would achieve multiple strategic objectives for both Skydance and National Amusements:

For Skydance:

  • Gain control of a major Hollywood film and TV studio with an iconic 105-year brand and massive content library
  • Expand into broadcasting, cable TV, streaming and live events
  • Leverage Paramount’s global distribution and marketing infrastructure
  • Diversify into news, sports and other TV content through CBS networks
  • Unlock synergies between Paramount and Skydance’s production capabilities
  • Cement Skydance as an entertainment conglomerate able to compete long-term with the likes of Disney, Netflix, Apple and Amazon

For National Amusements/Redstones:

  • Monetize their controlling stake in Paramount Global at a premium valuation
  • Focus National Amusements’ efforts on ViacomCBS streaming service Pluto TV
  • Simplify corporate structure by offloading the complexity of managing Paramount Global
  • Let the Redstone family (ages range from 79 to 99) cash out their long-term media holdings at a high point

Wall Street analysts have recently valued Paramount Global at $26-36B, representing significant upside for the Redstones from Paramount’s ~$15B market cap today.

Deal Would Consolidate Ellison’s Influence in Hollywood

For David Ellison, acquiring the famed Paramount studios would complete his ascent from indie producer to one of Hollywood’s most influential figures literally overnight.

The deal would hand the 42-year old Ellison the keys to Paramount’s kingdom – a sprawling media empire encompassing:

Paramount Pictures – major film, TV and streaming studio behind franchises like Mission: Impossible, Transformers, Star Trek, The Godfather
CBS Network – US broadcast TV network and news leader
Showtime Networks – premium broadcaster of hit series like Billions, Dexter and The Man Who Fell to Earth
Simon & Schuster – leading book publisher
Paramount+ – streaming platform now exceeding 65 million subscribers
PlutoTV – ad-supported streaming TV with over 80 million monthly active users
Channel 5 – commercial broadcaster in the UK
TEN Network – commercial broadcaster in Australia

That collection of assets would propel the younger Ellison into the top echelon of media moguls, giving him vast influence to shape pop culture and entertainment globally through the Paramount megaphone.

It would also unite the fortunes of Hollywood’s famous Ellison family. Brother Megan Ellison is the founder and CEO of powerhouse indie studio Annapurna Pictures, which has produced acclaimed films like American Hustle, Phantom Thread, If Beale Street Could Talk and Vice.

While David and Megan would continue operating independently, their collective clout in Tinseltown would be unprecedented for a pair of siblings.

What It Means for Paramount Leadership

If Skydance’s bid succeeds, it remains unclear what would happen to the existing leadership of Paramount Global. CEO Bob Bakish and Paramount Pictures chair Brian Robbins have contracts through 2024 and have earned kudos for starting to turn around the company after years of underperformance.

Most analysts believe Ellison would make strategic changes but maintain continuity in the creative ranks, while potentially replacing some division heads with his own trusted team. As a Hollywood insider, he seems unlikely to clean full house. Paramount is already in the midst of executive changes like TV chief David Nevins‘ planned departure.

Of course, any deal is still a long way from completion. But the offer shows David Ellison is playing for entertainment’s highest stakes.

The Road Ahead and Deal Risks

If talks progress, Ellison and National Amusements will need to negotiate a specific price and transaction structure in coming weeks or months. But any deal would still require running an obstacle course of approvals before reaching the finish line.

The next steps if talks advance:

  • Ellison and National Amusements agree on price and terms
  • Financing secured reflecting deal specifics
  • Merger agreement signed after due diligence completed
  • Paramount Global board approval
  • National Amusements shareholder vote
  • Regulatory review by FTC/DOJ on anti-trust grounds
  • Potential counteroffers surface from other studios, tech giants or investment groups

That gives the process ample opportunity to go off the rails based on financial, legal or political considerations.

A few key risks that could derail Skydance’s ambitions:

Financial Risks

  • Deal price expectations mismatch between buyer and seller
  • Rising interest rates increase financing costs
  • Competitive counterbids emerge from cash-rich tech or media companies

Business Risks

  • Closer scrutiny of Paramount’s finances/performance makes deal less attractive
  • Government blocks deal or forces divestures on anti-competition grounds
  • Talent exodus destabilizes Paramount leadership or IP pipeline during extended process

Ellison Track Record

Year Company Investment
2010 Founded Skydance Media Self-financed
2013 Acquired Silicon Valley VFX house Supply chain/tech IP
2018 Launched Animation division Organic diversification
2021 Raised $275M at $4B valuation Institutional capital
2022 Explored takeover of Miramax Industry M&A
2024 Bids for Paramount Global Transformational deal

Despite risks, Ellison has built Skydance brick-by-brick into one of Hollywood’s top indie studios. Acquiring Paramount would cement his legacy in entertainment history. But the Paramount crown may still prove out of reach unless his offer hits the mark with the company’s owners.

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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