Media

Paramount, Bronfman Jr.'s retirement paves the way for sale to Skydance

Paramount has announced that the consortium led by Edgar Bronfman Jr, who tried to contest the company with Skydance, has decided to withdraw

by Andrea Biondi

27 August 2024

3' min read

Key points

Bronfman Jr.'s retirement.
The resource node
A $28 billion biggie
Future Governance
Evolution in the media

3' min read

Now Skydance finds its path paved. With the aim, as reiterated by Paramount's special committee, of finally closing the sale by the first quarter of next year.

Bronfman Jr.

's retirement

In the financial feuilleton of the US summer with the fate of Paramount at its centre, yet another twist comes with the withdrawal, after one week, of the bid by Edgar Bronfman Jr. A statement has sanctioned the sudden withdrawal from the game for the conquest of the US media bigwig in which the current president of Fubo Tv - as well as former Universal Studios executive, former president of Warner Music Group and heir to the concluded entrepreneurial history of the Canadian Seagram, which was the world's largest distillation company based in Montréal - had decided to bet $6 billion.

Among the financial backers of the attack advanced by Bronfman Jr. were Fortress, controlled by the Abu Dhabi fund Mubadala, Bc Partners and the entrepreneurs Steven Paul, Brock Pierce and Nurali Aliyev, nephew of the former leader of Kazakhstan.

The resource node

Something must have gone wrong in the closing of the financial circle for an offer that had been raised from the $4.3 billion put on the table on Monday 19 August, just in time to stop the clock before the 21 August deadline set in the agreement signed in July between Skydance and Paramount. Or, according to rumours bouncing around in the American press, Skydance's own wall, which has pointed the finger at Paramount and alleged violations in the procedure, threatening legal repercussions, may also have played a role in the decision to backtrack.

In any case, the turnaround came. "We believe," Bronfman Jr. said in a note, "that everyone involved in the sales process is united in the belief that Paramount's best days are yet to come. We congratulate the Skydance team and thank the special committee and the Redstone family for their efforts during the go-shop process."

A $28 billion big

Now this latest extension of the terms (the go-shop period) to close the negotiations with parties other than David Ellison's Skydance and Gerry Cardinale's RedBird Capital, is in fact concluded. And so for the American media giant (with assets ranging from cable TV channels such as Mtv, Comedy Central and CBS, to the streaming service Paramount+) there remains only the offer of Skydance, the emerging film studio that helped produce 'Top Gun: Maverick', downstream of which a new $28 billion Hollywood big shot should be created.

The scheme involves Skydance of David Ellison, son of Oracle founder Larry Ellison, acquiring Shari Redstone's National Amusements Inc. - which owns 77% of Paramount Global - to merge and create New Paramount. The agreement to sell National Amusements to Skydance was reached on the basis of 2.4 billion sollars with 4.5 billion earmarked for the other shareholders and 1.5 billion in capital to be injected into Paramount to relieve the debt front prior to the merger with Skydance, which is valued at USD 4.75 billion.

Future Governance

After the merger, Ellison will be CEO and chairman of the new company. Instead, Jeff Shell, former CEO of NBCUniversal, who later joined the US fund RedBird Capital (in the deal as an investor, as mentioned) and became chairman of RedBird Sports & Media, will take over as chairman. Immediately, the need for $2 billion in cuts was indicated.

Evolution in the media

Basically, there is a need to intervene in a very delicate competitive framework, for Paramount as for the other historical media players. In recent years, the company has suffered a significant decline in market value. Under the leadership of Shari Redstone, it reconsolidated Viacom and CBS in 2019. But along the way it has lost billions of dollars in valuation: today Paramount's market cap is $8 billion, whereas at that time it was around $30 billion. In the meantime, like everyone else, it has had to deal with a streaming challenge that has proved much more difficult than expected. On 8 August, it wrote down the value of its cable channels, which include MTV, Nickelodeon and Comedy Central, by $6 billion.

Andrea BiondiVicecaposervizio
Luogo: Milano
Lingue parlate: Italiano, Inglese, Francese
Argomenti: Finanza, Media, Telecomunicazioni, Economia dell'entertainment, Innovazione
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