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Paramount Global, the media giant behind CBS and MTV, has agreed to merge with David Ellison’s Skydance Media, ending years of speculation about Paramount’s future.
The merger, announced Sunday, comes weeks after Ellison’s failed attempt to buy Paramount, raising questions about the company’s direction. The deal solidifies Ellison’s position as a major figure in the media world and ends Shari Redstone’s control of Paramount, the conglomerate her late father, Sumner Redstone, has built since the 1980s.
The deal involves Skydance first acquiring National Amusements and then merging it with Paramount, valuing Skydance at $4.75 billion. Skydance will invest $2.4 billion to acquire National Amusements, $4.5 billion in a stock/cash merger, and another $1.5 billion to bolster Paramount’s balance sheet.
Ellison will become CEO of the new company, and former NBCUniversal CEO Jeff Shell will serve as president. In a conference call with investors, Ellison and Shell highlighted a strategy to position Paramount as a “technological leader” in streaming and outlined a $2 billion cost-cutting plan.
Ellison said he was committed to building on the company’s creative strengths while also acknowledging the challenges posed by the decline of the traditional TV model, and he stressed the need for a new business strategy in light of these industry shifts.
The merger caps a turbulent period that began in December, with exclusive negotiations starting in April and leading to the resignation of long-time CEO Bob Bakish. During that time, the company was run by Brian Robbins (CEO of Paramount Pictures), Chris McCarthy (CEO of Showtime and MTV Entertainment Studios) and George Cheeks (CEO of CBS).
Paramount has struggled in recent years as it pivoted from traditional TV to streaming services. Although the company has invested heavily in its streaming service Paramount+, it still lags behind competitors such as Netflix, causing its valuation to plummet, with its stock price falling more than 75% over the past five years.
At a recent town hall meeting, Robbins acknowledged the difficulties that come with merger speculation and stressed that the company will be focused on future success regardless of which path it chooses.
Despite several high-price offers to sell a portion of Paramount, including Showtime and betRedstone turned them down because of her strong feelings toward the company her father founded. However, the offer from Skydance Media, founded by David Ellison in 2010, was so compelling, both in terms of cash and a commitment to Paramount’s future, that she couldn’t refuse.
Skydance and Paramount have a good cooperative relationship and have co-producedtop Redstone said the merger will ensure Paramount’s success in a rapidly changing industry, expressing optimism and stressing that “content is king.”
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