What a Skydance Merger Means for the Future of Paramount TV and Streaming

Skydance Media has entered into a definitive agreement with Paramount Global to form “New Paramount,” capping off months of negotiations, bidding wars and public speculation.

The potential move would have a lasting impact on Paramount’s assets, forever changing the company’s TV and streaming portfolio. It would also end the Redstone family’s three-decade ownership of Paramount, with Sumner Redstone acquiring it in 1994 and his daughter, Shari, taking over in 2019.

What to know about the deal:

The merger, which is expected to close in 2025, will take place in two steps.

First, Skydance Media, with financial backing from the private investment firms RedBird Capital and KKR, will pay $2.4 billion for National Amusements Inc., the holding company that owns 77% of Paramount’s Class A shares. Then, Skydance will merge with Paramount in an all-stock transaction that values Skydance at $4.75 billion.

Skydance Media will also invest up to $6 billion in the newly combined operation: $1.5 billion of which is earmarked for paying down Paramount’s debt, while the remaining $4.5 billion can be used to buy out existing Paramount shareholders.

According to the company, Class A stockholders will receive $23 per share, while Class B stockholders will cash out at $15 per share. The total value of the deal is more than $8 billion, an increase from Skydance Media’s May offer of $5 billion.

Skydance Media is owned by David Ellison, the son of Oracle founder Larry Ellison. Following the merger, Ellison will serve as the chief executive and chairman of the combined company. Meanwhile, Jeff Shell, who was ousted as NBCUniversal CEO in 2023 after admitting to an “inappropriate relationship” with a colleague—and later joined RedBird Capital—will serve as president of the company.

The tie-up comes after a monthslong bidding war over Paramount, whose assets include the Paramount+ streaming service and networks such as CBS, MTV, BET and Nickelodeon.

What this means for Paramount:

Skydance Media’s acquisition of Paramount will likely result in a paring down of the Paramount portfolio, an expedited path to profitability for Paramount+ and an increased focus on bundling and partnerships, according to analysts.

Paramount is already shopping around several of its assets, including BET and VidCon. Under Skydance Media, those efforts will likely continue as Ellison looks to shed non-core assets.

“Paramount’s assets will probably get broken up,” Ross Benes, eMarketer senior TV and streaming analyst, told ADWEEK. “I doubt Skydance will want to retain everything that Paramount currently owns.”

On a Monday morning call, Shell noted Skydance had identified $2 billion in cuts, which will be delivered “rapidly” and would include slashing Paramount’s linear media operations.

“There’s powerful businesses, but you have to make tough decisions,” Shell said.

Implementing cost savings efforts and shedding elements of the Paramount portfolio will allow Skydance Media to focus its attention on the streaming service Paramount+, which wants to narrow its hundreds of millions in quarterly losses.

“Paramount+ is among the better streaming services from a consumer perspective, but it is losing lots of money,” Benes said. “Skydance will look to reduce losses. Layoffs would not be surprising.”

What this means for the TV and streaming industry:

The heightened interest in acquiring Paramount comes as the streaming ecosystem continues to overtake the linear television industry, forcing companies with legacy assets to seek suitors before the value of holdings falls further.

The acquisition will provide Paramount+ with an injection of capital, strengthening its position in the streaming landscape. Still, to compete with peers like Netflix and Disney, the company will need to take steps to expand its reach, according to Mike Proulx, vp and research director of Forrester.

“This merger is the result of the need for restructuring in order to effectively compete with content scale and financial profitability as the underlying economics of entertainment portend a new playbook,” Proulx said.

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What happens now:

The agreement with Skydance includes a 45-day “go-shop” period during which the Special Committee of Paramount’s Board of Directors, with the assistance of its financial advisors, can evaluate alternative proposals. However, the Skydance deal reportedly includes a $400 million breakup fee if the deal falls apart.

As an additional way to widen its audience, Paramount+ could consider further mergers, such as a potential combination with Warner Bros. Discovery. However, such a tie-up would result in such a debt-laden company that it would have little chance of succeeding, according to Benes.

Instead, a more likely maneuver is for Paramount+ to seek further bundle and partnership agreements, similar to the kinds struck by WBD, Disney, Fox, Netflix and others in recent months.

“We’re squarely in the messy middle of entertainment’s massive shift to an eventual all-streaming future,” Proulx said.

Additional reporting by Bill Bradley.