Paramount appears ready to back away from the Skydance deal

Shari Redstone

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After weeks of negotiations, the proposed merger between Skydance and Paramount Global appears set to fail.

A special Paramount board committee appeared to be lukewarm on the bid, which would have seen the David Ellison-led studio, joined by financial partners RedBird Capital and KKR, acquire and retain controlling shareholder Shari Redstone’s stake in the company and then merge Skydance into Paramount. As a publicly traded company, with new leadership at its helm.

Skydance was in an exclusive 30-day negotiating window, and proposed a revised offer last weekend that would have offered some incentives to Paramount’s common shareholders, some of whom had vocally opposed the deal. This window ends today, and is unlikely to be extended.

Another source close to the deal says that talks between the two sides are continuing.

Paramount has another offer on the table: a $26 billion cash deal from Apollo and Sony Pictures. It’s not immediately clear what the status of that deal is, though it will carry more regulatory concerns, due to Apollo’s existing ownership of the TV broadcast stations, and Sony’s status as a Japanese company.

Redstone is said to be unenthusiastic about the deal.

The end of the Skydance talks capped an eventful week for Paramount, as the company parted ways with CEO Bob Bakish on Monday, replacing him with a trio of executives who work in the “Office of the CEO.”

While Bakish has largely declined to comment on deal talk, he told analysts on the company’s fourth-quarter earnings call that he is focused on creating value for the company. everyone contributors (emphasis his), suggesting that there was daylight between him and Redstone, and the friction that could have led to his overthrow.

Bakish’s departure follows news that four board members will not run for re-election at the company’s next annual meeting, scheduled for June 4. It was not immediately clear what led to their decision, although there was speculation that it may be related to deal talks.

With the Skydance deal seemingly stalled, and the regulatory viability of the Apollo-Sony deal in question, Paramount may need to find its own way forward under its new leaders Brian Robbins, George Cheeks and Chris McCarthy.

“Going forward, we are finalizing a new long-term plan to best position this company to reach new and greater heights in our rapidly changing world,” the trio wrote to employees shortly after taking the helm of the company.

One source says executives are prepared to lead the company for the long term, and confirmed that a formal strategic plan will be sent to employees in the coming weeks.

Paramount shares fell about 5 percent on the day.

Spokespeople for Paramount, Skydance, Shari Redstone and the board’s special committee declined to comment.