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Shari Redstone has agreed to sell Hollywood group Paramount to independent film studio Skydance in a deal that ends her family’s involvement in the company founded by her grandfather in 1936.
The merger, which values the new company at $28bn, marks the close of a tumultuous eight-month process in which Redstone held discussions with a range of potential suitors including private equity group Apollo and Sony.
It comes just weeks after Redstone blocked a deal with Skydance, which is run by billionaire David Ellison and is backed by US private equity groups including RedBird, at the eleventh hour. The deal is expected to close in the first half of 2025.
The sale transfers the Paramount film studio, which produced classic cinema titles including The Godfather, Titanic, Chinatown and Raiders of the Lost Ark, from the Redstone family to Ellison’s company. His father is Oracle co-founder Larry Ellison, one of the world’s richest people.
“Given the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king,” said Redstone. “Our hope is that the Skydance transaction will enable Paramount’s continued success in this rapidly changing environment.”
Under the terms of the agreement, Skydance will invest about $8bn to take over Paramount. In the two-step transaction, Skydance will pay $2.4bn to buy out National Amusements, which holds nearly 80 per cent of the voting shares in Paramount.
Skydance will then merge with Paramount. Common shareholders in Paramount will receive $15 a share, while those holding A shares will receive $23 a share.
Skydance, an independent studio launched by the 41-year-old Ellison in 2010, has produced blockbusters including Top Gun: Maverick, Star Trek Into Darkness and Jack Reacher: Never Go Back.
Though it took months to finalise the deal, Ellison and Redstone had found common ground early in their discussions. Both had hard-charging, demanding fathers — Sumner Redstone said more than once that his daughter would never run his company — and they both had a love for the Paramount studio lot on Melrose Avenue in Hollywood, according to people close to the executives.
“I am incredibly grateful to Shari Redstone and her family who have agreed to entrust us with the opportunity to lead Paramount,” said Ellison, who will become the chief executive and chair of the group.
Following the death of her father in 2020, Redstone took over the company. She championed the idea of challenging Netflix and other streaming services with the launch of Paramount+, which has lost billions.
The future of Paramount+ will be one of the urgent questions facing Jeff Shell, the former chief executive of NBC, who will become president of the newly combined company.
With losses mounting last year, then chief executive Bob Bakish slashed the company’s dividend, which rattled investors and hit Redstone’s own finances. She soon began to explore her strategic options.
During a chaotic, highly public process involving several rival bids, Bakish and four board members left the company amid discord with Redstone.
As part of the agreement reached on Sunday. Paramount’s advisers have 45 days to entertain rival bids for the company.
In the weeks since the previous Skydance deal fell apart, other potential bidders have emerged, including media mogul Barry Diller and Edgar Bronfman Jr, the media executive and heir to the Seagram business. US private equity group Apollo, together with Sony, had also offered to buy Paramount at a $26bn valuation.
“The recapitalisation of Paramount and combination with Skydance under David Ellison’s leadership will be an important moment in the entertainment industry at a time when incumbent media companies are increasingly challenged by technological disintermediation,” said Gerry Cardinale, founder of RedBird and Ellison’s key partner in the deal.
