David Ellison agrees to buy Redstone family firm that controls Paramount
Tech scion David Ellison has reached a preliminary deal to buy the Redstone family holding company National Amusements Inc., which would give his Skydance Media control over Paramount Global, according to three people close the situation who were not authorized to comment.
The tentative agreement, which came together Tuesday, represents another dramatic reversal by media mogul Shari Redstone, who controls National Amusements and its 77% voting shares in Paramount Global.
Redstone has long been impressed by Ellison’s ambition and success as a producer in Hollywood, but last month she abruptly called off a proposed Ellison-led two-phase deal for NAI and Paramount amid 11th hour wrangling.
Undeterred, Ellison and his group forged ahead to hammer out an agreement, moving closer in his months-long quest to win control of Paramount in a deal that is expected to mark a new chapter for the long-beleaguered media company and the parent of one of Hollywood’s oldest movie studios. The company has struggled to shift to the streaming era and lags deep-pocketed rivals.
The agreement, which must still be approved by Paramount’s independent board members, would give Ellison, son of billionaire Oracle Corp. co-founder Larry Ellison, control of a media operation that includes Paramount Pictures, broadcast network CBS and cable channels MTV, Comedy Central and Nickelodeon.
The challenges amid the rapidly changing industry in many ways prompted Redstone to part with her beloved family heirloom, passed down from her father, the late Sumner Redstone. The decision to let go was a difficult one, according to people close to the mogul. Her family has long swelled with pride through its ownership of Paramount, formerly known as Viacom.
Under the previous deal proposal, Skydance and its financiers had planned to pay more than $2 billion for National Amusements. After the firm’s debt was paid off, the sum would have provided the Redstone family with about $1.7 billion.
The new deal sweetens the offer with about $50 million more for the Redstone family — or about $1.75 billion total — for their Massachusetts-based holding company, the knowledgeable people said. In addition to the family’s Paramount shares, National Amusements includes a regional movie theater chain founded during the Great Depression.
Also making the deal more acceptable to Redstone, Skydance and its backers, RedBird Capital Partners and private equity firm KKR, agreed in recent days to stronger provisions to shield the family from shareholder lawsuits, the knowledgeable people said.
The agreement was first reported by the Wall Street Journal.
Skydance and its financial partners have agreed to provide a $1.5-billion cash infusion to help Paramount pay down debt. The deal, as previously envisioned, also would set aside more than $4 billion to buy shares of Paramount investors who are eager to exit.
As part of the recent back-and-forth, Redstone dropped a proposal to give non-voting class shareholders the ability to vote on the matter. The additional step, which was not required because Redstone controls the voting shares, had long been a deal-breaker for Ellison, RedBird and KKR.
The preliminary agreement also carves out a 45-day period in which other interested bidders can step up to make offers for Paramount, one of the knowledgeable people said.
The proposed handoff signals the end of the Redstone family’s nearly 40-year reign as one of America’s most famous and fractious media dynasties. The late Sumner Redstone’s National Amusements was once valued at nearly $10 billion, but pandemic-related theater closures, last year’s Hollywood labor strikes and a heavy debt burden sent its fortunes spiraling.
The deal now goes to a special committee of Paramount’s board for their approval. The committee received the NAI-Skydance deal terms around 5 p.m. Eastern Tuesday. It was not clear when the board members would vote on the latest proposal.
After months of back-and-forth, Paramount’s independent board members had tentatively approved the Paramount portion of the deal in late May. About a week later, that deal was scuttled by Redstone. At the time, National Amusements said it was encouraged by the triumvirate of division heads installed to run the company as its “Office of the CEO.†The trio last week held a town hall meeting with Paramount employees to share their “going-forward†plan, which includes $500 million in cost-cutting including layoffs.
Paramount boasts some of the most historic brands in entertainment, including the 112-year-old Paramount Pictures movie studio, known for landmark films such as “The Godfather†and “Chinatown.†The company owns the CBS television network and stations including KCAL-TV (Channel 9) and KCBS-TV (Channel 2). Its once-vibrant cable channels such as Nickelodeon, TV Land, BET, MTV and Comedy Central have been losing viewers.
Paramount’s independent board committee had agreed in May to entertain a competing $26-billion offer from Sony Pictures Entertainment and Apollo Global Management. The bid, which would have retired all shareholders and paid off Paramount’s debt, initially was a favorite among many investors.
But that bid lost steam as Sony executives grew increasingly wary of taking over a company that relies on declining traditional TV channels.
Other potential buyers for National Amusements surfaced in recent months, complicating the decision for Redstone, who has overseen the family’s empire since her father began dealing with health issues eight years ago. Sumner Redstone died in 2020. The other suitors had proposed paying the family more than what was contained in the Skydance proposal.
The list of potential suitors included former top Seagram and Warner Music executive Edgar Bronfman Jr.; Hollywood producer Steven Paul (“Ghost in the Shell,†“Baby Geniusesâ€); and Barry Diller, who famously lost a bidding war for Paramount to Sumner Redstone in 1994.
Many in Hollywood — film producers, writers and agents — have been rooting for the Skydance takeover, believing it represents the best chance to preserve Paramount as an independent company. Apollo and Sony were expected to break up the enterprise, with Sony absorbing the movie studio into its Culver City operation.
Shari Redstone long preferred the arrangement offered by Ellison because she hoped to keep the media empire together.
.
Ellison first approached Redstone about making a deal last summer, and talks became known in December. He was attracted to the deal, in part, because of his past collaborations with Paramount Pictures and the allure of combining their intellectual properties as well as the cachet of owning a historic studio, analysts said.
In addition to such cinematic landmarks as “The Godfather†movies and “Ferris Bueller’s Day Off,†Paramount’s rich history contains popular franchises including “Transformers,†“Star Trek,†“South Park†and “Paw Patrol.â€
Ellison’s father, Larry Ellison, is said to be contributing financing to the deal.
Once the transaction is finalized, Ellison’s plan has long been for Paramount to acquire his Santa Monica-based Skydance Media, which has sports, animation and gaming as well as television and film production.
Ellison is expected to run Paramount as its chief executive.
The handover to Skydance would require the approval of regulators.
Paramount’s stock rose 7% to $11.47 a share in after hours trading.
Paramount Global did not immediately offer comment.
Inside the business of entertainment
The Wide Shot brings you news, analysis and insights on everything from streaming wars to production — and what it all means for the future.
You may occasionally receive promotional content from the Los Angeles Times.
