Paramount Pictures Is Merging With The Company Behind Its Biggest Franchise

UPDATE: A new report from the Wall Street Journal states that Paramount's Shari Redstone has ended negotiations with David Ellison's Skydance Media. Which means as of now, the merger between Paramount and Skydance is off the table. Things could change, of course, but as of now, things have stalled out. We'll update you with more info when and if we have it. The original story continues below. 

It's (almost) official: Paramount Pictures is the latest Hollywood studio to merge with another major player in the business. After months of speculation, with multiple potential buyers entering the fold, it has been confirmed that Skydance Media, the producer of the "Mission: Impossible" franchise, will merge with the longstanding studio, per CNBC. The news comes just ahead of Paramount's annual shareholder meeting on Tuesday, June 4. It's expected that the deal will be formally announced by the company during the meeting.

Skydance RedBird Capital and investment firm KKR partnered on the deal. It is valued at around $8 billion, which is far less than some other major media mergers in recent years. Disney's purchase of most of Fox's media assets, for example, cost a whopping $71.3 billion in 2019. Even Amazon's more recent purchase of MGM in 2022 was valued at $8.5 billion. But that speaks in large part to why this deal is happening. The company's stock price has dropped significantly of late and this new deal may help strengthen both parties in the long run.

Paramount's CEO Bob Bakish stepped down in late April. Since then, there has been an "office of the CEO" in charge, with that room weighing the decision along with a special committee that had been formed to consider offers for the company. Skydance has been in the mix the whole time and it's a partnership that makes sense. The two companies have been producing films together since 2009. While the "Mission: Impossible" franchise is their biggest whale, they also have collaborated on "Terminator," "G.I. Joe," "Transformers," "Star Trek," and other major brands. Not to mention "Top Gun: Maverick," which now ranks as one of the biggest movies in history.

Now for the details: While the deal is awaiting a formal sign-off from Paramount's controlling shareholder Shari Redstone, it is expected to be finalized. Redstone owns National Amusements, which itself controls a majority stake of Paramount. Not to get too deep into the weeds here, but the deal, as it currently exists, has Redstone being paid $2 billion for National Amusements. Skydance will buy out almost 50% of Paramount's class B shares at $15 each, which comes to $4.5 billion. That means shareholders will have equity in the new company. Rather crucially, Skydance and RedBird will also chip in a reported $1.5 billion in cash to help reduce Paramount's debt.

Even though Skydance pulled through in the end, other suitors emerged in recent months. Warner Bros. Discovery held talks with Paramount in December 2023, but those talks seemingly fell through pretty quickly. That is almost certainly for the best, given that WarnerMedia only recently merged with Discovery, which was rather messy. More recently, Sony and private equity firm Apollo Global Management made a $26 billion, all-cash offer for the company. That deal, however, likely would have been a nightmare in terms of regulatory approval. It also would have effectively reduced the number of major studios in Hollywood from five to four, which wouldn't have been great for the average consumer.

This all comes as every company in the business is trying to secure a financial future in an ever-changing landscape. From the death of cable TV to the ever-evolving streaming wars, not to mention the perilous state of the box office, it's increasingly difficult to see the best path forward. Mergers help offer some of these companies protection, with the idea being that bigger is safer. We'll surely learn much more in the coming days as this situation evolves, and we'll be sure to break it all down when the time comes. Stay tuned.