Paramount Global And Skydance Merger Will Shed $2 Billion In Cost Cutting Measures

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Paramount Global parent National Amusements and Skydance Media have agreed to merge less than a month after the sides abruptly ended deal talks.

Paramount, owner of Paramount Pictures movie and television studios, the CBS television network and CBS News, announced in a news release late Sunday that it is combining with Skydance, an entertainment business founded by David Ellison, son of Oracle founder Larry Ellison. Paramount also owns the Paramount+ streaming service, Nickelodeon, BET, MTV, Comedy Central and other media brands. 

The transaction resolves months of speculation around the future of Paramount, which also reportedly attracted a $26 billion bid from a consortium including Sony Pictures and private equity firm Apollo Global Management. A range of prominent media and entertainment industry executives were also said to have expressed interest in a possible deal for Paramount.

Under the two-step deal, Skydance will first pay $2.4 billion for National Amusements, which controls 77% of the voting shares of Paramount. Shareholders with non-voting stock will receive $15 per share, or one share of non-voting stock in the new company. 

Class A shareholders other than National Amusements will receive $23 per share, or the right to get 1.5333 non-voting shares in the merged company. Paramount Global would then merge with Skydance in an all-stock transaction that values the latter at $4.75 billion.

The deal also gives other potential bidders for Paramount 45 days to submit a competing offer, an apparent effort to appease shareholders who felt Skydance's initial bid undervalued their stake in the media company. The transaction is subject to regulatory approval. 

Uniting old and new Hollywood

The deal unites Paramount — a storied movie studio dating back to 1912 that is known for film classics such as "Titanic," "The Godfather" and "Raiders of the Lost Ark," as well as franchises including "Star Trek" and "Mission Impossible" — with a relative newcomer to the entertainment industry. Since David Ellison launched Skydance in 2010, the company has produced or co-produced hit films and TV shows including "Top Gun: Maverick" and the "Reacher" streaming series. 

"This is a defining and transformative time for our industry and the storytellers, content creators and financial stakeholders who are invested in the Paramount legacy and the longevity of the entertainment economy," Ellison said in a statement. "I am incredibly grateful to Shari Redstone and her family who have agreed to entrust us with the opportunity to lead Paramount. We are committed to energizing the business and bolstering Paramount with contemporary technology, new leadership and a creative discipline that aims to enrich generations to come."

Ellison will serve as chairman and CEO of Paramount, and Jeff Shell, chairman of RedBird Sports and Media, a unit of investment firm RedBird Capital Partners, will become president. Shell is the former CEO of NBCUniversal.

Redstone's final act

For Shari Redstone, the controlling shareholder in National Amusements, the deal brings to a close her family's long stewardship of Paramount, which was built on the foundation laid by her late father, entertainment mogul Sumner Redstone. In recent years, that effort has focused on growing Paramount's streaming footprint, along with the continued expansion of its core network TV, cable and movie businesses. 

"In 1987, my father, Sumner Redstone, acquired Viacom and began assembling and growing the businesses today known as Paramount Global," Redstone said in a statement. "He had a vision that 'content was king' and was always committed to delivering great content for all audiences around the world. That vision has remained at the core of Paramount's success and our accomplishments are a direct result of the incredibly talented, creative and dedicated individuals who work at the company. Given the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king."

The merger with Skydance follows what has been a fraught negotiation in which Paramount executives sought to balance the interests of investors who own the company's voting shares — which are primarily controlled by Redstone — and investors with non-voting stock. The latter are represented by large institutional investors such as Berkshire Hathaway and Vanguard, according to financial data firm FactSet.

The deal also follows the April 29 departure of former Paramount Global CEO Bob Bakish, who was replaced by an Office of the CEO led by three division chiefs: George Cheeks, president and CEO of CBS; Chris McCarthy, president and CEO of Showtime and MTV Entertainment Studios; and Brian Robbins, president and CEO of Paramount Pictures and Nickelodeon.

After the initial deal to combine National Amusements and Skydance collapsed on June 11, Paramount's new leadership disclosed plans to cut costs by $500 million, explore a joint venture or other possible partnerships for Paramount+, and sell non-core assets. It is uncertain how that blueprint could change under Skydance's watch. 

In a call with Wall Street analysts on Monday to discuss Paramount's future, Shell said RedBird and Skydance had identified roughly $2 billion in potential cost savings.

In its most recent quarter, Paramount reported an operating loss of $417 million on revenue of $7.6 billion, compared with a loss of $1.2 billion on revenue of $7.2 billion in the year-ago period. Skydance, which is privately held, expects its annual revenue to reach $1 billion in 2024, according to The Wall Street Journal. 

The sale of Paramount also highlights ongoing consolidation within the media space as industry stalwarts like Paramount and CBS seek to compete with much larger competitors, including technology and entertainment companies. 

Skydance Media Gets Board Committee Approval For Control Of Paramount Global After Lengthy Chase

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David Ellison‘s Skydance Media has gained a key approval vote for the company’s proposed acquisition of Paramount Global controlling shareholder National Amusements Inc. after seven months of talks.

The deal was blessed Sunday by a special committee of Paramount’s board of directors, a person familiar with the matter told Deadline. A formal announcement is expected as soon as Monday morning.

Bloomberg News earlier Sunday was the first to report on the special committee vote.

While the board committee action is a milestone, one of the features of the current agreement is a 45-day “go-shop” provision, which allows NAI chief Shari Redstone to field alternative offers. Apollo Global Management, Barry Diller and Edgar Bronfman Jr. are among those who have explored bids. Apollo, both on its own and in partnership with Sony Pictures, has submitted formal offers in recent months but they haven’t gained much traction.

Under terms of the Skydance agreement, Redstone and her family will receive $1.75 billion, with additional funds going toward Paramount debt repayment. The transaction is expected to be the first of two parts, with a full merger between Skydance and Paramount Global to follow. NAI controls nearly 80% of Paramount’s Class A, or voting, shares. It holds only about 10% of its equity value, with that disparity adding to the complexity of deal negotiations in recent months.

Skydance is a longtime partner with Paramount Pictures as a co-financier on marquee franchises like Mission: Impossible, Star Trek, Transformers and Top Gun. Along with the 112-year-old movie studio, Skydance will gain control of a portfolio including CBS, Nickelodeon and Paramount+. Unlike other bidders aiming to break up the company, Skydance is seen as wanting to preserve the entity in much the same shape as it currently exists, though there will undoubtedly be significant cost cutting. That strategic vision helps explain Redstone’s longtime preference for Skydance over some other suitors, according to sources familiar with the deal talks.

Less than a month ago, it seemed that any hope of the parties reaching a deal had evaporated. Redstone pulled out of a planned deal at the 11th hour over concerns regarding her net proceeds and exposure to shareholder lawsuits. While earlier Skydance overtures caused Paramount’s already battered stock to sink even lower due to concerns about shareholder dilution, the most recent go-round has boosted the share price. In Hollywood and media circles, the Paramount M&A watch has punctuated a period marked by existential anxiety and fears emerged of another major studio poised to disappear in the wake of Fox’s absorption by Disney.

Ellison and his backers (reportedly including his father, billionaire Oracle founder Larry Ellison) were undaunted by Redstone’s last-minute reversal in June. Parting with the media empire built by her father, Sumner Redstone, has never been an easy process. Shari Redstone, after taking the reins a decade ago as Sumner Redstone’s health declined, succeeded with signature initiative, bringing Viacom and CBS back under the same corporate umbrella after multiple attempts. The merger of the companies into what is now Paramount Global closed in December 2019.

The triumph of shepherding the merger turned out to be short-lived, with Covid and numerous other difficulties piling up as two companies became one. Today, Paramount faces considerable challenges on many fronts. The company, which is a fraction of the size of top media rivals Disney and Comcast, is straining to make a profit in streaming as it confronts secular declines in its linear TV business and an unsettled moviegoing climate. While Paramount shares have enjoyed an uptick on the merger news, they are still worth less than one-third what they were when Viacom and CBS came together.

As the company has explored various M&A scenarios, it has also jettisoned longtime CEO Bob Bakish in favor of a tripartite Office of the CEO consisting of veteran execs George Cheeks, Chris McCarthy and Brian Robbins. At the company’s annual shareholder meeting and a subsequent town hall with employees last month, the execs laid out their strategy, which consists of reducing expenses (targeting $500 million in annual cost savings), maximizing the asset portfolio and exploring streaming partnerships or joint ventures. Just before the most recent Skydance news broke last week, there were reports of Paramount in talks to sell BET and discussing a streaming partnership with a third party.

“While we recognize that this is not a traditional management structure, we are confident that it will enable them to move quickly to implement best practices throughout the company and to drive improved performance,” Redstone said at the annual meeting.

As the Office of the CEO gets set to pass the baton (former NBCUniversal CEO Jeff Shell is waiting in the wings as part of the Skydance bid), yet another round of downsizing will reshape the company’s workforce. At the end of 2023, the company had 21,900 full- and part-time employees.

“We’d like to take a moment to acknowledge the challenges of all the M&A speculation surrounding our company,” Robbins said during the town hall. “We know what a difficult and disruptive period it has been. And while we cannot say that the noise will disappear, we are here today to lay out a go-forward plan that can set us up for success no matter what path the company chooses to go down.”

Candle Media Restructures, Folding Animation Into Moonbug As Hello Sunshine Chief Sarah Harden Takes Over Rebranded Studio

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Blackstone-backed “next generation” entertainment group Candle Media is tightening belts amid the streaming downturn, enacting a series of cost-cutting measures and reorganization of its acquisitions. The outfit will split into two divisions, folding its animation business into CoComelon studio Moonbug (which Candle acquired in November 2021 for nearly $3 billion), while live-action projects are collected under the rebranded Candle Studios.

Sarah Harden, formerly chief of Reese Witherspoon’s Hello Sunshine label (acquired by Candle in August 2021 for $900 million), will head the live-action division rebranded as Candle Studios (also including prodcos Exile, True Stories and Faraway Road). The parent company, established in 2021 by Disney alums Kevin Mayer and Tom Staggs with a $1 billion investment from Blackstone, dissolved Hello Sunshine’s animation division into Moonbug last year.

Candle set up to fill demands of streamers as major studios began damming up their content to reserve for their own platforms, paying hefty sums to acquire popular brands. In an interview with Semafor Tuesday, Mayer said that this angle on approaching streaming buyers was “the one thesis that is holding true, though it’s fraying around the edges slightly.” The co-CEO agreed that Candle had paid “at the top of the market” for its acquisitions. “Have the financials borne out the way we would like, to have to support the prices that we paid? Probably not,” he admitted, adding optimistically, “Talk to us in two or three years.”

A Blackstone spokesperson also told Semafor that one of the biggest impacts on Candle’s financial state were the dual Hollywood strikes by SAG and WGA last year. The company also carries about $1.4 billion in debt, which at 12% is consuming most of its earnings. “We continue to be optimistic about [Candle’s] prospects coming out of the work stoppages and look forward to supporting its growth,” the investor rep noted.

Semafor‘s Ben Smith points out, “Moonbug has almost single-handedly saved [Candle Media]. Despite a drumbeat of questions from the industry about the company’s strategy, properties including CoComelon make Candle a powerhouse in children’s media, a great business on YouTube, and has a solid foothold in streaming.”

Paramount Global Has Applied For A New Trademark Based On SpongeBob SquarePants Called Bikini Bottom News

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Paramount, under Viacom International Inc., has applied to register Bikini Bottom News under NICE Class "41 - Education, entertainment, sporting and cultural services", for "Entertainment services, namely, providing a multimedia video segment and online content in the nature of non-downloadable videos". The request was filed on June 25, 2024, and is currently pending approval.

Bikini Bottom News takes it name from the Bikini Bottom News news channel featured in the SpongeBob Universe, which reports events happening in and around Bikini Bottom, with the Realistic Fish Head and Perch Perkins serving as the network's main reporters.

As the name and description suggest, Bikini Bottom News is most likely a SpongeBob SquarePants-themed digital series. Although a launch date has yet to be announced, Bikini Bottom News will most likely form part of Nickelodeon's celebrations to commemorate the 25th anniversary of SpongeBob SquarePants.

Source: NickALive

Paramount And Skydance Are Said To Reach A Deal To Merge

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Just weeks after Paramount’s controlling shareholder and Skydance abruptly ended merger talks, the two sides have reached a preliminary deal to create a new Hollywood giant, four people familiar with the negotiations said Tuesday.

The agreement will still have to be approved by a special committee of Paramount’s board of directors, said the people, who spoke on the condition of anonymity as talks resumed.

Paramount — the parent company of CBS, MTV and Nickelodeon — and Skydance, the up-and-coming movie studio that helped produce “Top Gun: Maverick,” called off talks in June just before a scheduled vote on a merger. While the two sides had agreed on economic terms, Shari Redstone, Paramount’s controlling shareholder through its parent company, National Amusements, had clashed with Skydance in the final weeks of negotiations.

But the two sides have continued to talk, and now the Paramount board committee will evaluate whether new terms will be sufficiently palatable for shareholders, some of whom pushed back significantly against the last proposed deal. One likely point of focus will be the extent of protection offered to National Amusements in event of shareholder lawsuits.

In this latest deal, National Amusements’ equity would be valued at $1.75 billion, up slightly from $1.7 billion in the transaction’s last incarnation, three of the people said.

Paramount Global Is In Exclusive Talks To Sell BET For $1.6 Billion

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Paramount Global is in exclusive talks to sell its Black Entertainment Television network to buyers that include BET Chief Executive Officer Scott Mills and Chinh Chu, who runs the New York-based private equity firm CC Capital.

The group has been discussing an offer of $1.6 billion to $1.7 billion, people familiar with the matter said, asking not to be named revealing information that’s not public. 

Last year, the same group had discussed an offer of a little under $2 billion, Bloomberg reported in December. Chu and Mills are rekindling discussions with Paramount for BET after Shari Redstone, who has a controlling stake in Paramount, walked away from a proposed merger with Skydance Media, the company led by David Ellison. 

Representatives for Paramount and Chu declined to comment. Mills didn’t respond to a request for comment. The shares jumped on the news and were up 4.2% to $10.56 at 2:28 p.m. in New York.

Paramount, which owns CBS, MTV and other networks, had also previously received an offer from media mogul Byron Allen, who put together a $3.5 billion bid last year for both BET and the VH1 channel, and emphasized that BET should be Black-owned. Actor and filmmaker Tyler Perry, who is an investor in the BET+ streaming service, also held discussions about purchasing a stake in the larger enterprise.

The sale process last year was “disrespectful,” Perry said at a Bloomberg event last year. “Don’t try to get me to pay for something that’s not worth anywhere near the value” Paramount said it was, he said at the time.

Founded in 1980 by businessman Robert L. Johnson, BET was sold to Paramount’s predecessor, Viacom, in 2001 for about $3 billion. The network has strong ties to some of the most successful Black entertainment creators, including Perry, Kenya Barris and Rashida Jones, who are investors in the BET Studios production company.

Paramount has said it’s working to cut $500 million in costs to boost profitability. 

Barry Diller's IAC Is Exploring A Bid To Take Control of Paramount Global

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Media mogul Barry Diller is taking a look at acquiring National Amusements Inc., the company owned by Shari Redstone and the controlling shareholder of Paramount, CNBC reported on Tuesday.

Diller's IAC, an internet media and publishing company, has signed a nondisclosure agreement and is looking in the data room of National Amusements, Faber said Tuesday. IAC could make a decision in the near term to place a bid on National Amusements, which would give it a controlling stake in Paramount, he said, citing sources.

These discussions come weeks after National Amusements stopped talks with Skydance on a proposed merger with Paramount.

Following months of deal talks with a consortium that included David Ellison's Skydance and private equity firms RedBird Capital and KKR, the deal was called off as it awaited signoff from Redstone. National Amusements, which Redstone controls, holds 77% of class A Paramount shares.

Prior to calling off the proposed merger, National Amusements had agreed to financial terms of the deal. The proposed deal would have seen Redstone receive $2 billion for National Amusements, with Skydance buying out nearly 50% of class B Paramount shares at $15 apiece, or $4.5 billion. Skydance and RedBird had also agreed to contribute $1.5 billion in cash to Paramount's balance sheet to help reduce debt.

Terms of IAC's potential bid are unknown, but it would likely have to be more than $2 billion, Faber reported Tuesday. The New York Times first reported Diller's interest in Paramount.

While Diller, 82, is currently the chairman of IAC and Expedia, he has a long track record in the media industry, including serving as chairman and CEO of Paramount Pictures in the 1970s and 1980s. He followed Paramount with his post at the head of 20th Century Fox, where he greenlit Fox network programs including "The Simpsons."

Diller has been vocal about the need for legacy media companies such as Paramount to give up on chasing Netflix in the streaming wars and focus on their broadcast and pay-TV networks.

During the Hollywood strikes last summer, he said that despite cord cutting, traditional pay-TV is still profitable — unlike most streaming businesses. He called on legacy media to build up traditional networks again.

Diller tried to acquire Paramount Pictures in the 1990s, but went toe-to-toe with Sumner Redstone, the father of Shari Redstone, who now controls the company.

Since then, Paramount has changed and grown in various ways. The company now comprises the movie studio, as well as the CBS broadcast network, a portfolio of cable TV networks such as MTV and BET plus streaming services Paramount+ and Pluto.

While other suitors have reportedly been interested in owning Paramount, the company has been focused on restructuring its business.

Now led by the so-called Office of the CEO — CBS CEO George Cheeks, Paramount Media Networks CEO Chris McCarthy and Paramount Pictures CEO Brian Robbins — Paramount has concentrated on exploring streaming joint venture opportunities with other media companies, slashing $500 million in costs and divesting noncore assets.

Cartoon Network Africa Partners With E-Waste Recycling Authority To Tackle Growing E-Waste Challenge In South Africa

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Cartoon Network Africa, the leading kids' TV channel in South Africa, is partnering with the local E-Waste Recycling Authority (ERA) as part of its Climate Champions initiative. The collaboration aims to educate and empower children about the increasing challenge of electronic waste.

 

As a registered Producer Responsibility Organisation (PRO), ERA is dedicated to improving e-waste recycling in South Africa and is a leader in electronic waste management. The organisation facilitates and implements the country’s regulations on the proper disposal and management of electronic waste, as laid out by South Africa’s Waste Electronic and Electrical Equipment (WEEE) Extended Producer Responsibility (EPR) Regulations, which came into effect in 2021.

 

The partnership comes at a crucial time as South Africa grapples with an escalating e-waste crisis. With only 10% of e-waste currently being recycled, it contributes to landfills quickly reaching capacity. E-waste is the fastest-growing waste stream, growing three times faster than general municipal solid waste.

 

A research survey undertaken by Cartoon Network found that 70% of children aged 6-11 across the EMEA region had not heard of e-waste or were aware but not sure / had no idea what it means. Results from the study show that:

• Majority of kids aged 6-11 yrs. Claim to have heard of e-waste, but in reality, few (30%) know what it means

• Kids in Poland (47%), Turkey (37%) and South Africa (28%) are more familiar with e-waste than peers in the UK (19%) and France (17 %)

• Polish kids (81 %) are notably more likely to link e-waste with the correct definition vs other markets; South Africa (33%), the UK (26%) & France (19%) under-index

• Most kids (87 %) have at least one e-waste item at home, with South Africa being above the index at 97%, with kids’ toys, headphones, and tablets among the top three items

• 64% of kids in South Africa say they store e-waste items at home or throw them away, highlighting the need for education

Through the partnership with ERA, Cartoon Network will use its beloved characters and engaging storytelling to teach children about e-waste, its problems, and how recycling can be a solution. The aim is to inspire children to become e-waste warriors, advocating for recycling in their homes and communities.

 

"Understanding what happens to rubbish is good to learn from childhood. Technology is such a big part of kids’ lives these days and it’s crucial that they understand the importance of recycling e-waste from a young age,” says Ashley du Plooy, CEO at ERA. “Electronics can have a second life - even broken toys with cables or batteries can be transformed into something new! That's because they often have valuable materials. Recycling them correctly also safeguards the environment for future generations."

 

By combining education with entertainment, Cartoon Network Africa and ERA hope to cultivate a generation of environmentally aware children who comprehend the significance of responsible e-waste management.

 

Cartoon Network Climate Champions’ new e-waste video content will air on the Cartoon Network channel and includes a ‘Guide to E-waste’ video that explains what e-waste is, why it’s an important issue and the basics of how we can help tackle it. Cartoon Network will also air e-waste promos, explaining issues around e-waste with a call to action on how kids can get involved in tackling it, and share weekly uploads to its social and YouTube channels to help broaden the reach and drive key e-waste messages home.

 

Monika Oomen, VP of Brand, Communications, and Digital Content Strategy for Kids EMEA at Warner Bros. Discovery, expressed, "In our efforts to engage kids into climate action, the partnership with ERA is a vital addition to our Cartoon Network Climate Champions campaign, by combining Cartoon Network's commitment to engaging storytelling with ERA's expertise in e-waste management, we can reach kids on a platform they love while empower them to become environmental champions.”

 

This comes as annual electronic waste generation is on track to reach a staggering 82 million tonnes globally per year by 2030, including items such as mobile phones, laptops, MP3 players, plugs, and batteries.

 

Cartoon Network’s Climate Champions initiative empowers and inspires young people to act and help the environment. Kids aged 6-12 can become Climate Champions by taking up daily challenges and making a world of difference together. Among the many e-waste challenges available are the ‘Device Rescue Mission,’ where children check their homes for old electronic devices that can be recycled, the ‘No Crossed Wires’ challenge, which involves taking care of chargers by preventing damage from wire tangles, and the ‘Phone Numbers!’ challenge, where kids count the number of mobile phones in their homes, including unused ones.

 

In addition to helping kids understand the extent of the e-waste problem, ERA has a comprehensive list of e-waste recycling drop-off points around the country. Living sustainably with technology means ensuring all ageing and failed electronic products are discarded using trusted e-waste recycling points that prevent the materials from ending in landfills.

For more information on how to become a Cartoon Network Climate Champion, you can visit the Climate Champions website or download the Climate Champions app and discover facts and trivia about e-waste, new quizzes, new voting cards, and new videos featuring real kids talking about the issue of electronic waste, and new e-waste challenges that can ‘Make a World of Difference.’

Paramount Global Is In Talks For A Streaming Merger

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Paramount Global is currently in discussions with other entertainment companies about merging its Paramount+ streaming service with an existing platform. If successful, this could trigger a wave of similar partnerships across the media sector and strengthen the industry as a whole.

The leadership at Paramount Global is actively exploring potential structures for merging Paramount+ with another streaming entity, potentially leading to a co-owned platform. These discussions, which are private, involve various media and tech company executives.

Warner Bros Discovery Inc has shown interest in such a deal, which could strengthen both services by allowing them to better compete with Netflix Inc and Disney’s suite of platforms (Disney+, Hulu, and ESPN) for audience and future content.

Earlier this year, preliminary merger talks were held for a complete deal with Paramount Global, but these discussions did not progress.

Paramount Global is also considering a potential partnership with a technology platform, as revealed by the company's co-CEO Chris McCarthy at an employee town hall on June 25.

A merged streaming service could offer more diverse programming, reducing customer churn and potentially removing Paramount+ losses from Paramount Global’s balance sheet by introducing new ownership.

While the structure for a potential joint venture with Warner Bros. Discovery hasn't been discussed in detail, it is likely that ownership wouldn't be evenly split due to the current nature and finances of the streaming assets.

Max, Warner Bros. Discovery's direct-to-consumer business, boasts about 100 million global subscribers, with 52.7 million based in the U.S. Meanwhile, Paramount+ ended its first quarter with 71 million subscribers.

NBCUniversal, owned by Comcast Corp, has also shown interest in a joint venture with Paramount+. However, these discussions did not progress significantly.

Since late 2019, traditional media companies including Paramount Global, Disney, NBCUniversal, and Warner Bros. Discovery have all launched streaming services, resulting in billions of dollars in losses. The industry consensus suggests there are too many streaming services relative to the number of total paying customers.

If Paramount finalizes a joint venture with either Max or Peacock, it could put pressure on the remaining service to seek a similar deal.

Media companies are now focusing on better monetizing streaming content through bundles and partnerships. For example, Disney and Warner Bros. Discovery have recently become more willing to license some of their content to rival streaming services, such as Netflix, to better monetize shows that aren't adding a lot of new subscribers to their streaming services.