Tuesday, news came out that Edgar Bronfman Jr., a media executive, had made an offer of $4.3 billion for National Amusements in an effort to break the deal that National Amusements would be merged with David Ellison’s Skydance Media. This caused Paramount Global’s shares to drop 2.5%.
Shari Redstone and her family run Paramount PARA -1.49% through National Amusements. Paramount owns CBS, the streaming service Parmount+, the movie company Paramount, and the cable networks Comedy Central and Nickelodeon.
The Wall Street Journal reported that people familiar with the situation said Bronfman is offering to buy National Amusements and get a small share in Paramount in an equity deal worth $1.75 billion. This is the same amount of money that Skydance has offered.
He has also offered to put $1.5 billion into Paramount’s bank sheet, which is the same thing Skydance is doing.
A $400 million breakup fee is part of the offer and would be paid by Paramount if they choose to go with another deal instead of Skydance.
Reports say Bronfman has gotten money from wealthy people and family offices because he used to run Warner Music Group Corp. (WMG 0.28%) and the booze company Seagram Company Ltd. A movie producer named Steven Paul has also joined hands with him. Paul is another person who has shown interest in National Amusements.
David Ellison is the CEO of Skydance. His father, Larry Ellison, is the co-founder and chief technology officer at Oracle Corp. and also worked on some of Tom Cruise’s “Mission: Impossible” movies. OCRL 0.54%
Redstone made a deal with Skydance last month to sell National Amusements. Skydance agreed to pay more than $8 billion to buy the company and then combine it with Paramount.
Skydance is also giving an extra $4.5 billion, which Paramount can use to either buy out about half of the nonvoting shares at $15 each or roll into the new company. This is on top of the $1.75 billion value of the company’s shares and the $1.5 billion for its balance sheet. Shareholders who aren’t Redstone would get $23 per share or can join the new company.
It was possible to “go-shop” for the Skydance deal, which ended on Wednesday. As reported by the Wall Street Journal, the executive has talked about bringing in other partners from fields like technology if he takes over Paramount. This is why a Bronfman was predicted.
According to the terms of the Skydance deal, the next step is for a special committee of directors at Paramount to decide if Bronfman’s bid “is or would reasonably be expected to lead to a superior proposal” compared to Skydance’s offer. If it does, the go-shop period should be extended for another two weeks.
Plus, Skydance can make its deal even better. The company wouldn’t say anything to the WSJ.
Bronfman is also the executive chairman of fuboTV Inc., a company that offers streaming TV. FUBO-3.61%, whose stock went up 30% on Monday after a judge stopped Venu Sports, a streaming service from the Walt Disney Co. DIS -1.34%, Warner Bros. Discovery Inc. WBD -0.26%, and Fox Corp. FOXA 0.47%, from starting up just a week before it was supposed to. (Fox is owned by the same company as MarketWatch publisher Dow Jones’s parent company, News Corp.)
U.S. District Judge Margaret Garnett said Friday that the three companies are trying to “exercise near-monopolistic control over the ability for a different live-sports-only streaming service to exist and compete.”
It’s been months since the fight for Paramount began. In June, Skydance seemed close to making a deal, but talks broke down at the last minute. They started up again a few weeks later.
As Paramount and other media companies try to make their streaming services profitable and fight with Netflix Inc. NFLX 2.89%, some analysts have already called it the winner of the streaming wars. They have cut costs, let go of staff, and looked to join forces. Since the strikes last year, studios have cut back on making TV shows.
Sony and the private equity firm Apollo Global Management Inc. APO -1.52% were among the other buyers who came up during the talks. So were Barry Diller and his media company IAC Inc. IAC 0.21% and Bronfman.
It was said that television mogul Byron Allen had made an offer in January.
So far this year, Paramount’s stock has dropped 27%, which is less than the 17.6% gain in the S&P 500 SPX.
