LOS ANGELES--Streaming-era upstart Skydance Media began scripting a new chapter on Monday for Paramount Global, the day after reaching a deal to acquire one of Hollywood's oldest studios, home of "SpongeBob SquarePants" and "The Godfather".
In a two-step process, Skydance and its deal partners will acquire National Amusements, which holds the Redstone family's controlling stake in Paramount, for $2.4 billion in cash. Skydance will subsequently merge with Paramount, offering $4.5 billion in cash or stock to shareholders and providing an additional $1.5 billion for Paramount's balance sheet.
Class B non-voting shares of the CBS broadcast network owner closed down 5% Monday, while Class A voting closed up nearly 3%.
David Ellison, the 41-year-old tech scion who founded Skydance, will become chairman and chief executive of the new Paramount. Jeff Shell, former chief executive of NBCUniversal, will be its new president.
The goal is to position the "new Paramount" as a "tech hybrid, able to transition to meet demands of the evolving marketplace," Ellison told financial analysts on Monday.
The deal, announced late Sunday, ends an era for Shari Redstone, whose late father Sumner Redstone transformed the family's chain of drive-in movie theaters into a media empire that included Paramount Pictures, the CBS broadcast network and cable television networks Comedy Central, Nickelodeon and MTV.
"Given the changes in the industry, we want to fortify Paramount for the future, while ensuring that content remains king," Redstone, chair of Paramount and National Amusements, said in a statement, citing a phrase her father coined.
The merger would combine Paramount, home of such classic films as "Chinatown," "Ferris Bueller's Day Off" and "Breakfast at Tiffany's," with its financial partner on several major recent films, including "Top Gun: Maverick," "Mission: Impossible-Dead Reckoning" and "Star Trek Into Darkness".
Ahead of an investor presentation on Monday, Paramount disclosed in presentation slides that the deal will produce $2 billion in run-rate savings, half of it in the first year. Restructuring and integration costs will reach $1.6 billion, according to the slides.
Paramount's 2025 revenue will reach $32.6 billion on a pro forma basis and 2027 revenue is expected to rise 2% to $33.5 billion, according to the slides.
The deal also gives Paramount 45 days to find a better offer, leaving open the possibility of yet another plot twist in an already chaotic deal process. If Paramount receives another offer, which Skydance does not match, it would pay a $400 million break-up fee.
Ellison, son of Oracle co-founder Larry Ellison, stands to lead a media company with a mountain of challenges navigating an entertainment business upended by the streaming video revolution. Paramount has shed nearly $17 billion in value since late 2019, as its traditional television business has eroded faster than its Paramount+ streaming service could turn a profit.
Ellison pledged to bring "best-in-class" technology and modern infrastructure to Paramount+ and the free streaming service, Pluto TV, even as it enhanced Paramount's traditional television networks.
