07/08/2024 – 11:17
Skydance Media and Paramount Global have reached an agreement to merge, the companies announced Sunday, writing a new chapter for one of Hollywood’s oldest studios.
The companies have agreed to a two-step process in which Skydance and its partners will acquire National Amusements, which holds the Redstone family’s controlling stake in Paramount, for $2.4 billion in cash.
Skydance will later merge with Paramount, offering $4.5 billion in cash or stock to shareholders and providing an additional $1.5 billion on Paramount’s balance sheet.
Ahead of an investor presentation on Monday, Paramount disclosed in slides that the deal will produce $2 billion in run-rate savings, with half of that delivered in the first year. Restructuring and integration costs will total $1.6 billion, according to the slides.
Paramount’s 2025 revenue will reach $32.6 billion and 2027 revenue is expected to increase 2% to $33.5 billion, according to the slides.
The Redstone Era
The deal represents the end of an era for Shari Redstone, whose late father and patriarch, Sumner Redstone, built the family’s chain of drive-in theaters into a media empire that included Paramount Pictures, broadcaster CBS and cable networks Comedy Central, Nickelodeon and MTV.
“Given the changes in the industry, we want to strengthen Paramount for the future by ensuring that content remains king,” Redstone, chairman of Paramount and National Amusements, said in a statement, quoting a phrase coined by his father.
The merger will combine Paramount, which is behind such classic films as “Chinatown,” “The Godfather” and “Breakfast at Tiffany’s,” with its financial partner on several recent major films, including “Top Gun: Maverick,” “Mission: Impossible — Reckoning” and “Star Trek Into Darkness.”
David Ellison, the 41-year-old technology entrepreneur who founded Skydance, will become chairman and chief executive of the new Paramount. Jeff Shell, the former chief executive of NBCUniversal, will become its new president.
Ellison will inherit a media company that faces a number of challenges as it navigates an entertainment industry disrupted by the video streaming revolution.
Paramount’s Downfall
Paramount has lost nearly $17 billion in value since the end of 2019 as its traditional television business has eroded faster than its Paramount+ streaming service could generate profits.
Ellison pledged to bring “best-in-class technology” and a modern infrastructure to Paramount+ and its free streaming service, Pluto TV, even as he upgraded Paramount’s traditional television networks.
“We are committed to energizing the business and strengthening Paramount with contemporary technology, new leadership and a creative discipline that aims to enrich future generations,” Skydance said in a prepared statement ahead of the deal announcement.
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