David Ellison agrees to buy Redstone family firm that controls Paramount
Tech scion David Ellison has reached a preliminary deal to buy the Redstone family holding company National Amusements Inc., which would give his Skydance Media control over Paramount Global, according to three people close the situation who were not authorized to comment.
The move represents another dramatic reversal by media mogul Shari Redstone, who controls National Amusements and its 77% voting shares in Paramount Global.
Redstone has long been impressed by Ellison’s ambition and success as a producer in Hollywood, but last month she abruptly called off a proposed Ellison-led two-phase deal for NAI and Paramount amid 11th hour wrangling.
Undeterred, Ellison and his group forged ahead to hammer out an agreement, moving closer in his months-long quest to win control of Paramount in a deal that is expected to mark a new chapter for the long-beleaguered media company and the parent of one of Hollywood’s oldest movie studios. The company has struggled to shift to the streaming era and lags deep-pocketed rivals.
The agreement, which must still be approved by Paramount’s independent board members, would give Ellison, son of billionaire Oracle Corp. co-founder Larry Ellison, control of a media operation that includes Paramount Pictures, broadcast network CBS and cable channels MTV, Comedy Central and Nickelodeon.
The challenges amid the rapidly changing industry in many ways prompted Redstone to part with her beloved family heirloom, passed down from her father, Sumner Redstone. The decision to let go was a difficult one, according to people close to the mogul. Her family has long swelled with pride through its ownership of Paramount, formerly known as Viacom.
Under the previous deal proposal, Skydance and its financiers had planned to pay more than $2 billion for National Amusements. After the firm’s debt was paid off, the sum would have provided the Redstone family with about $1.7 billion.
The new deal sweetens the offer with about $50 million more for the Redstone family — or about $1.75 billion total — for their Massachusetts-based holding company, one of the knowledgeable people said. In addition to the family’s Paramount shares, National Amusements includes a regional movie theater chain founded during the Great Depression.
Also making the deal more acceptable to Redstone, Skydance and its backers, RedBird Capital Partners and private equity firm KKR, agreed in recent days to stronger provisions to shield the family from shareholder lawsuits, this person said.
The agreement was first reported by the Wall Street Journal.
Skydance and its financial partners have agreed to provide a $1.5-billion cash infusion to help Paramount pay down debt. The deal, as previously envisioned, also would set aside more than $4 billion to buy shares of Paramount investors who are eager to exit.
The proposed handoff signals the end of the Redstone family’s nearly 40-year reign as one of America’s most famous and fractious media dynasties. The late Sumner Redstone’s National Amusements was once valued at nearly $10 billion, but pandemic-related theater closures, last year’s Hollywood labor strikes and a heavy debt burden sent its fortunes spiraling.
The deal now goes to a special committee of Paramount’s board for their approval.
After months of back-and-forth, Paramount’s independent board members had tentatively approved the Paramount portion of the deal. About a week later, that deal was scuttled by Redstone.
Paramount boasts some of the most historic brands in entertainment, including the 112-year-old Paramount Pictures movie studio, known for landmark films such as “The Godfather” and “Chinatown.” The company owns the CBS television network and stations including KCAL-TV (Channel 9) and KCBS-TV (Channel 2). Its once-vibrant cable channels such as Nickelodeon, TV Land, BET, MTV and Comedy Central have been losing viewers.
The handover would require the approval of regulators.
Paramount’s stock rose 7% to $11.47 a share in after hours trading.
Paramount Global did not immediately offer comment.
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