Shari Redstone is one step closer to selling her media empire.
Paramount, one of Hollywood's most storied movie studios and home to cable networks such as CBS and Nickelodeon, is in talks to enter into exclusive negotiations with media company Skydance for a potential deal, according to people familiar with the discussions. This was revealed by four people. The move to exclusive negotiations would be an important step forward in a process that has been shrouded in uncertainty for months.
It remains to be seen whether the two sides will agree to exclusivity, especially since other investors are still pursuing Paramount. Apollo Global Management, an investment firm with more than $500 billion under management, has submitted an $11 billion offer to buy Paramount Pictures Studios. But Paramount's board is seeking a deal for the entire company, including the cable channels and CBS, rather than a partial deal.
Two people familiar with the situation said Apollo is continuing to evaluate what proposal would be most attractive to the company's board of directors. Byron Allen, whose entertainment studio owns the Weather Channel, has also expressed interest in buying Paramount.
Mr. Redstone, Paramount's controlling shareholder, began negotiations with Skydance last year to sell his stake in the company. She controls Paramount through her holding company, National Amusements, which owns Paramount's voting stock. Mr. Redstone had held off on selling for years, betting that the company's fortunes would improve as its flagship streaming service, Paramount+, gained momentum.
Transaction terms being discussed include Skydance's acquisition of National Amusement and its merger with Paramount. The transaction is subject to approval by Paramount's board of directors, which has been considering its options for several weeks with the help of advisors.
Late last month, David Ellison, the tech heir who founded Skydance, met with Paramount's board to discuss his vision for the deal, according to two people familiar with the talks. Skydance, founded in 2010, is best known for spearheading Paramount's blockbusters, including the “Mission: Impossible” and “Top Gun” series of films.
Representatives for Paramount and Skydance declined to comment, and the financial terms of the deal are unclear.
Paramount stock has fallen 18% since the beginning of the year amid headwinds in the media industry. The company trades at a deep discount to the combined value of Viacom and CBS, which merged in 2019 to form Paramount. Paramount+ is still in the red, but the deficit is narrowing and the number of subscribers continues to increase.
Ratings agency S&P Global last week downgraded Paramount's debt to junk bond status, citing “accelerated decline” in its traditional TV business and continued uncertainty in its streaming push. Some analysts said the rating action could make a deal for Paramount easier because it could avoid a clause requiring the buyer to pay the company's debt immediately.