Entertainment giant Paramount will merge with Skydance, ending a decades-long run by the Redstone family in Hollywood and injecting desperate cash into a legacy studio struggling to adapt to a changing entertainment landscape.
It also marks the rise of a new power player, David Ellison, founder of Skydance and son of billionaire Larry Ellison, founder of software company Oracle.
Shari Redstone's National Amusements owns more than three-quarters of Paramount's Class A voting stock through the estate of her late father, Sumner Redstone. He had fought to retain control of the company that owns CBS, which is behind such blockbusters as “Top Gun” and “The Godfather.”
But just weeks after rejecting a similar deal with Skydance, Redstone agreed to a deal on terms that hadn't changed much.
“Given the changes in the industry, we want to strengthen Paramount for the future while ensuring that content remains king,” said Redstone, who is president of Paramount Global.
The new combined company is valued at approximately $28 billion.
Skydance, based in Santa Monica, Calif., has helped produce some of Paramount's major hits in recent years, including Tom Cruise movies like “Top Gun: Maverick” and parts of the “Mission Impossible” series.
Skydance was founded in 2010 by David Ellison and quickly formed a production partnership with Paramount that same year. Ellison, if the deal is approved by US regulators, will become chairman and chief executive of what is called New Paramount.
The re-merger comes at a tumultuous time for Paramount, which at an annual shareholder meeting in early June unveiled a restructuring plan that includes significant cost cuts.
Paramount's leadership has been volatile this year, after CEO Bob Bakish, after a series of disagreements with Redstone, was replaced by an “office of the CEO” run by three executives. Four company directors were also replaced.
Paramount, however, had been struggling to find its footing for years, and its cable business was hemorrhaging. To capture today's growing streaming audience, the company launched Paramount+ in 2021, but losses and debt continued to mount.
Sumner Redstone used National Amusements, his family's movie theater chain, to build a massive media empire that included CBS and Viacom, which merged and split up several times over the years. Most recently, the companies joined forces again in 2019, reversing a split completed in 2006. The company, ViacomCBS, changed its name to Paramount Global in 2022.
Under Sumner Redstone's leadership, Viacom became one of the nation's media titans, home to pay-TV channels MTV and Comedy Central and movie studio Paramount Pictures.
It's a company with a rich history as well as a deep bank of media assets, and Skydance wasn't the only one gunning for Paramount in recent months — Apollo Global Management and Sony Pictures also made competing bids.
Late last year, Warner Bros. Discovery also made headlines for exploring a possible merger with Paramount. However, by February, Warner had reportedly stopped those talks.
