(Bloomberg) — David Ellison is buying National Amusements Inc., the Redstone family’s holding company, as a way to take control of media giant Paramount Global, which owns MTV and Nickelodeon, according to people familiar with the matter. He reportedly made a preliminary offer to do so. On that matter.
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Ellison is also in talks with Paramount about merging his film and television studio, Skydance Media, into a larger media company once he takes control. Both sides have hired advisers and exchanged financial information, said the people, who requested anonymity to discuss private conversations.
National Amusements owns movie theaters and controls 77% of Paramount's voting stock. Paramount Chairman Shari Redstone and her advisors discussed the terms of the National Amusements acquisition with Mr. Ellison. He is backed by Skydance's investors, including his father Larry, a co-founder of software giant Oracle and one of the world's richest men, as well as private equity firms Redbird Capital Partners and KKR & Co. The plan is to fund the transaction. .
Another option being considered is for Ellison and his partners to take all of Paramount Global private, CNBC reported Wednesday. Paramount already has about $15 billion in net debt, so that would significantly increase transaction costs. A spokeswoman for Mr. Ellison declined to comment.
The 41-year-old media mogul is seizing a rare opportunity to buy one of Hollywood's great studios. He met with Redstone and tried to convince her to become the guardian of the company's many assets, especially the 110-year-old company's eponymous studio, which produced The Godfather, among other classic films. did. Ellison has worked for many years as a financier and producer at Paramount Pictures, producing projects such as the Star Trek film series, the Mission: Impossible film series, and the blockbuster Top Gun: Maverick.
I don't know if the deal will go through or not. Mr. Ellison and his advisers may find something they don't like as they review Paramount's finances.
Paramount may also have concerns. Paramount's stock price fell as the cable network lost viewers and its streaming business suffered losses. The company's stock market value is currently approximately $9 billion. Skydance was last valued at $4 billion, so Paramount investors could be asked to part with a significant portion of the company if the two companies merge.
Any transaction is complex and may be subject to litigation due to its unique structure. Mr. Ellison is seeking to gain control of the media company by buying out the controlling shareholder. Money manager Mario Gabelli, a major Paramount shareholder, expressed concern that Redstone could be sold on terms not offered to other investors.
Read more: Gabelli says Redstone will sue over Paramount stake sale
CBS Corp. shareholders sued Redstone when it merged the station with Viacom, but these Many parties involved in the negotiations are concerned about similar lawsuits.
Redstone will need to consider Ellison's terms and decide whether she is truly ready to relinquish control of her family's media empire. Until recently, she was reluctant to sell the business her father had built through a series of bold acquisitions. But the company's decision to cut its dividend last year prompted her to bring in outside investors and renegotiate National Amusement's debt.
The Oct. 7 attack on Israel by Hamas also motivated her to do more to fight anti-Semitism.
If Ellison takes over, he will inherit a venerable studio and a lot of trouble. Although he and his advisers have discussed selling the company's entire cable network, they told Redstone they would not break up the company into pieces and that their primary motivation was to He assured that the aim was to give the company the resources it needed to compete with other companies. media. The fate of the Paramount+ streaming service is uncertain.
(Updates with report on interest in Paramount overall in fourth paragraph.)
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