Hollywood was rocked Thursday by news that David Ellison, CEO of Skydance Media, has made a preliminary $10 billion cash offer to acquire Paramount Global from its controlling shareholder National Amusements Inc. The bold move aims to create a new media powerhouse and upend the landscape in the entertainment industry.
The Players: Ellison and Redstone’s Paramount Global Empire
Paramount Global is one of the most historic and renowned studios in Hollywood, home to popular brands like Paramount Pictures, CBS, Showtime Networks, Nickelodeon, MTV, Comedy Central and more. The company was built into an empire over decades under the controlling ownership of the Redstone family.
Current chair Shari Redstone wields vast power over Paramount inherited from her father Sumner Redstone. She oversaw the 2019 reunification of CBS and Viacom after they split 14 years earlier. Her National Amusements Inc, holds nearly 80% of voting shares in Paramount and she resists selling.
Challenging Redstone’s iron grip is David Ellison, the ambitious 46-year-old founder of Skydance Media. The son of billionaire Oracle co-founder Larry Ellison has steadily built his independent studio into a juggernaut. Skydance has co-financed and co-produced major blockbusters like the recent Top Gun: Maverick and operates animation and interactive divisions.
| Player | Company | Strengths |
|---|---|---|
| Shari Redstone | National Amusements/Paramount Global | Inherited media empire, controls voting power |
| David Ellison | Skydance Media | Aggressive leadership, major blockbuster hits |
Ellison has personally acquired over $500 million worth of Paramount shares in recent months, signalling his intense interest. And he has now put a $10 billion check on the table that Redstone cannot easily ignore.
Behind Ellison’s Power Move
Ellison’s offer is said to be exclusively cash, without any financing contingencies. This likely reflects confidence he can obtain backing from deep-pocketed partners. Major private equity firms like Apollo Global Management and investment firm Eldridge Industries have already circled a possible Paramount deal.
The timing may also be ideal for Ellison. Paramount struggled during the pandemic but rebounded strongly in 2022 buoyed by hits like Top Gun: Maverick, which grossed $1.5 billion globally. Yet doubts linger over leadership with CEO Bob Bakish under pressure.
Taking over Paramount would enable Ellison to vault into the upper echelons of Hollywood powerbrokers. Skydance could utilize Paramount’s vast content libraries and IP while leveraging its tech-forward capabilities across animation, interactive and AI.
Table: Reasons For and Against an Ellison Takeover
| Reasons For | Reasons Against |
|---|---|
| Paramount libraries + Skydance tech expertise | High $10 billion price tag |
| Timing ideal with leadership uncertainty | Redstone resists selling control |
| Ellison has relationships + ambition | Other bidders may compete |
“Ellison has been laser focused on running a competitive studio for the streaming wars,” said Tom Ogawa of Paradigm Research. “Owning Paramount would give Skydance the scale and content breadth to take on the likes of Disney and Netflix.”
Several industry observers say Ellison may seek innovative ways to update Paramount’s outdated structure using interactive storytelling, digital advertising and smarter data analytics. “He may try to connect various divisions to create a media metaverse of sorts,” noted Julia Alexander of Parrot Analytics.
The Plot Thickens: Will a Bidding War Emerge?
It remains far from guaranteed that Ellison can pry Paramount away from Redstone’s controlling grip at National Amusements. She previously resisted overtures from CBS regarding potential deals. Redstone would likely demand an exceptionally high premium to relinquish her family’s empire.
But Skydance’s offer is expected to prompt other suitors to enter the fray. Major private equity firm Apollo Global Management has considered acquiring a minority stake according to reports. Investment group Eldridge Industries, which holds a stake in Tribune Publishing, is said to be weighing an offer. Other large media entities and tech giants may bid as well.
“This could definitely turn into a bidding war,” said Robert Agius of Greenberg Glusker. “Paramount is a crown jewel asset with interested buyers on all sides from private equity players, telecoms like Comcast or wireless giants looking to expand their media presence.”
| Potential Bidders | Deal Structure | Likelihood |
|---|---|---|
| Skydance Media | $10B cash offer | Moderate |
| Apollo Global Management | Minority stake | Possible |
| Eldridge Industries | Competing bid | Possible |
| Apple, Amazon, Netflix | Tech suitors | Speculative |
Apollo in particular has aggressively acquired media assets and retains ample firepower for a mammoth deal. Its recent takeover targets include stations group Cox Media and publisher Yahoo. Skydance and Apollo could even partner on an acquisition.
Analysts say other scenarios around Paramount’s structure may arise given regulatory concerns over concentrated media ownership. Amazon or Comcast could make offers for certain Paramount divisions rather than the entire company. Or Paramount may sell non-core assets to streamline its business. Ellison appears open to these kinds of alternatives.
“This will come down to price but everyone has a number,” said Robert Agius of Greenberg Glusker. “If Redstone gets the right valuation she may find it prudent to strategically monetize parts of Paramount even if that means sacrificing some family control.”
What Comes Next
In the wake of Ellison’s preliminary but credible $10 billion overture, Hollywood watches eagerly to see Redstone’s response. Does she rebuff the approach entirely? Or does she set in motion an auction process to maximize her sale price?
Redstone has fought ferociously before to maintain dominance over Paramount and CBS. But the rich Ellison bid may prove too tempting to dismiss outright. Her family stands to reap billions from a successful sale.
If Redstone ultimately refuses, Ellison could wage a hostile takeover battle. He may try convincing Paramount shareholders that new leadership can revitalize the company’s growth. But overriding the Redstone’s super-voting shares would prove enormously difficult.
Most analysts expect brisk negotiations between Redstone and Ellison in coming weeks. Clear Channel Communications founder Bob Pittman could aid discussions given his close ties to both sides. The parties may find common ground on a helicopters deal allowing Redstone to keep partial control.
“This mega offer shakes up the entire media landscape,” concludes Tom Ogawa of Paradigm Research. “A successful takeover creates a new Hollywood titan. Either way, whether through a sale or competing bids, Paramount appears destined for major changes ahead.”
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