Merger talks between Paramount and Skydance fell apart in the final hours, after controlling shareholder Shari Redstone squashed the deal.
Merger talks between Paramount and Skydance fell apart in the final hours, after controlling shareholder Shari Redstone squashed the deal. Kim Masters and Matt Belloni examine what went wrong and talk through potential next steps.
What happened? Shari Redstone was asking for legal protection from Skydance, as potential lawsuits from Paramount shareholders loomed. “Skydance said no to that,” says Masters.
Cold feet? Redstone had apparently banked on David Ellison’s promise to keep the legacy studio more or less intact after his company, Skydance, took the reins. But was Ellison up for the task? “What about David Ellison's life makes so much reassurance that he can solve these huge, huge problems that are confronting the legacy studios – and you could say paramount in particular?” asks Masters. “He didn't really spell out what his plans were.”
A string along? Still, Redstone was intrigued. “She strung this company along for six months and all the way to the goal line,” says Belloni. “ She had a lot of other suitors – some that potentially would pay the shareholders more money – and she chose to go this path for her own financial benefit but also because she thought that this was the best steward for these assets.”
Ellison’s credentials? Ellison had the financial resources to survive the uncertainty in the streaming transition, plus he had sophisticated backers like RedBird Capital. But Hollywood was still “cautiously optimistic” about whether “he actually want[ed] to be in this business,” says Belloni.
A triple-headed hydra in the cards? Co-CEOs George Cheeks, Chris McCarthy, and Brian Robbins are in charge at Paramount. “Even though the idea of a triple-headed-Hydra of a company doesn't make a lot of sense to people [and] hasn't worked in the past, it looks like that is what's going to be happening for months ahead,” says Masters. Belloni doesn’t know how long that will last. “Unfortunately, it seems like Paramount is going to be headed for an asset sale and a breakup,” he says.