The turbulent courtship between Paramount Global-parent National Amusements and Skydance Media is back on less than a month after the sides abruptly ended merger talks.

Paramount, owner of Paramount Pictures movie and television studios, the CBS television network and CBS News, announced in a news release late Sunday that it is merging with Skydance, an entertainment business founded by David Ellison, son of Oracle founder Larry Ellison. Paramount also owns the Paramount+ streaming service, Nickelodeon, BET, MTV, Comedy Central and other media brands. 

The transaction resolves months of speculation around the future of Paramount, which also reportedly attracted a $26 billion bid from a consortium including Sony Pictures and private equity firm Apollo Global Management. A range of prominent media and entertainment industry executives were also said to have expressed interest in a possible deal for Paramount.

Under the the two-step deal, Skydance would first pay $2.4 billion for National Amusements, which controls 77% of the voting shares for Paramount, while shareholders with non-voting stock will receive $15 per share or one share of non-voting stock in the new company. 

Class A shareholders other than National Amusements will receive $23 per share or the right to get 1.5333 non-voting shares in the merged company. Skydance would then merge with Paramount. 

The deal also gives other potential bidders for Paramount 45 days to submit a competing offer, an apparent effort to appease shareholders who felt Skydance's initial bid undervalued their stake in the media company.

Uniting old and new Hollywood

The deal unites Paramount — a storied movie studio dating back to 1912 that is known for film classics such as "Titanic," "The Godfather" and "Raiders of the Lost Ark," as well as franchises including "Star Trek" and "Mission Impossible" — with a relative newcomer to the entertainment industry. Since David Ellison launched Skydance in 2010, the company has produced or co-produced hit films and TV shows including "Top Gun: Maverick" and the "Reacher" streaming series. 

For Shari Redstone, controlling shareholder of National Amusements, the deal brings to a close her family's long stewardship of Paramount, which was built on the foundation laid by her late father, entertainment mogul Sumner Redstone. In recent years, that effort has focused on growing Paramount's streaming footprint, along with the continued expansion of its core network TV, cable and movie businesses. 

In its most recent quarter, Paramount reported an operating loss of $417 million on revenue of $7.6 billion, compared with a loss of $1.2 billion on revenue of $7.2 billion in the year-ago period. Skydance, which is privately held, expects its annual revenue to reach $1 billion in 2024, according to the Wall Street Journal. 

The merger with Skydance follows what has been a delicate negotiation in which Paramount executives sought to balance the interests of investors who own the company's voting shares — which are primarily controlled by Redstone — and investors with non-voting stock. The latter are represented by large institutional investors such as Berkshire Hathaway and Vanguard, according to financial data firm FactSet.

The merger also follows the April 29 departure of former Paramount Global CEO Bob Bakish, who was replaced by an Office of the CEO led by three division chiefs: George Cheeks, president and CEO of CBS; Chris McCarthy, president and CEO of Showtime and MTV Entertainment Studios; and Brian Robbins, president and CEO of Paramount Pictures and Nickelodeon.

After the initial deal to combine National Amusements and Skydance collapsed on June 11, Paramount's new leadership disclosed plans to cut costs by $500 million, explore a joint venture or other possible partnerships for Paramount+, and sell non-core assets. It is uncertain how that blueprint could change under Skydance's watch. 

The sale of Paramount also highlights ongoing consolidation within the media space as industry stalwarts like Paramount and CBS seek to compete with much larger competitors, including technology and entertainment companies. 

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