Last week, news about a potential deal to merge media conglomerate Paramount Global and independent studio Skydance Media in an all-stock transaction valued at around A$7.5 billion emerged.
Under the terms being discussed, National Amusements, which controls Paramount, would receive over A$3 billion in cash in the initial stage of the transaction.
The Wall Street Journal report added that, separately, Skydance could provide a substantial cash infusion to Paramount, owner of the Paramount Pictures film studio, to help bolster its balance sheet and reduce debt.
Skydance owned by David Ellison, son of billionaire Oracle co-founder Larry Ellison, is the producer of titles including Mission: Impossible – Dead Reckoning, Transformers: Rise of the Beasts and Top Gun: Maverick.
Paramount are the owners of Hollywood studio Paramount Pictures, CBS, MTV and Comedy Central. Here in Australia, Paramount Global owns Network 10 and the subscription video-on-demand service Paramount+.
However, a major Paramount Global investor – Matrix Asset Advisors – issued a letter on Monday strongly advocating against the deal.
Matrix, which owns 355,445 Paramount shares, called the Skydance deal “detrimental” to the Paramount’s value, and demanded that the board instead reconsider a A$39.3 billion bid from private equity firm Apollo Global.
It added that the “vast majority of shareholders would not receive a similar premium and would be forced to finance a speculative investment in Skydance in a transaction significantly dilutive to shareholder value.”
Paramount, formed by the merger of Viacom and CBS back in 2019, has seen its stock lose nearly half its value over the past year. It has a market capitalisation of about A$12 billion.
In remarks aimed squarely at Shari Redstone, Paramount Global’s non-executive chairwoman and president of National Amusements, Matrix noted, “It is unfortunate that Ms. Redstone finds herself in an urgent need to raise cash at a time when Paramount’s stock is at a low ebb. But her unique problem should not penalise the other 90 per cent of the company’s shareholders.”
As an alternative to this deal, Matrix asked the Paramount board to give Apollo 30 days to perform diligence and confirm financing – the same terms that it was reportedly willing to offer Skydance.
