Shari Redstone, president of National Amusements and Vice Chairman, CBS and Viacom speaks on the WSJTECH live conference in Laguna Beach, California, U.S. October 21, 2019.Â
Mike Blake | Reuters
David Ellison’s Skydance Media and its financial backers are exploring a deal to take private all of Paramount Global, people accustomed to the matter told CNBC.
Skydance, the film and TV studio run by Ellison, has exchanged preliminary information with Paramount, said the people, who asked to not be named since the deal talks are private. Full due diligence hasn’t began, the people said.
Skydance has been working with private equity firms RedBird Capital Partners and KKR & Co. on a deal to purchase National Amusements, the holding company owned by Shari Redstone. It controls 77% of Paramount’s voting stock.
But that deal is contingent on merging Skydance with Paramount, and the likely structure for a merger can be a whole take private of the larger media company, said the people.
Redstone is considering selling because the media landscape shifts away from traditional TV toward streaming. While Paramount Global has run a profitable business for a long time, it’s smaller than Netflix, Google’s YouTube, Apple, Amazon, and other larger streamers which have greater balance sheets to afford sports and entertainment content.
No acquisition is assured, and talks could crumble.
It’s unclear if Redstone would demand a distinct premium for selling National Amusements than the remaining shareholders of Paramount Global would obtain.
Skydance would want additional capital to accumulate Paramount, which has a market capitalization of $8.2 billion and about $15 billion of debt. A few of that funding could come from Skydance’s private equity partners and Larry Ellison, the billionaire co-founder of Oracle and David Ellison’s father. Skydance hasn’t reached out for out of doors financing yet, because it hasn’t decided if it desires to move forward with a deal, said the people.
Skydance is not fascinated by a deal where it will only acquire National Amusements but not all of Paramount, said the people. While such a deal would give Skydance control of Paramount, it would not solve Paramount’s problems as a publicly traded company, which include running the growing but money-losing Paramount+ streaming service, and operating declining linear cable assets equivalent to MTV, VH1, Comedy Central and Nickelodeon.
Spokespeople for RedBird, Skydance, Paramount Global and National Amusements declined to comment.
Warner Bros. Discovery has also had preliminary discussions about acquiring Paramount Global, in accordance with people accustomed to the matter. If Redstone sells to Skydance, one motivating factor can be her fear that Warner Bros. Discovery would favor to merge with Comcast‘s NBCUniversal, one among the people said.
Puck first reported Skydance’s interest in acquiring National Amusements. The Wall Street Journal reported last week that Skydance was fascinated by a two-part deal that may include merging Skydance and National Amusements. Bloomberg first reported on the initial exchange of company information.
Disclosure: Comcast NBCUniversal is the parent company of CNBC.
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