Paramount Pictures

Source: Paramount Pictures

Paramount Pictures

Shari Redstone, whose National Amusements owns a majority stake in Paramount Global, has called off long-running merger talks with David Ellison’s Skydance Media.

The decision comes as Paramount Global’s special committee was understood to be meeting on Tuesday morning before National Amusements lawyers notified them the deal was off.

A spokesperson for National Amusements told press it was unable to reach “mutually acceptable terms regarding the potential transaction with Skydance Media for the acquisition of a controlling stake in NAI”.

They added, “NAI is grateful to Skydance for their months of work in pursuing this potential transaction and looks forward to the ongoing, successful production collaboration between Paramount and Skydance.”

The latest twist comes one week after Skydance sweetened its previous offer after apparent resistance from shareholders of Paramount Global, parent of Paramount Pictures, one of the most storied studios in Hollywood.

Ellison, backed by private equity player RedBird Capital, came back with an $8bn offer in a structure that would have seen Redstone receive $2bn for National Amusements, while Skydance would pay $4.5bn to buy out half of Paramount Global Class B shareholders at $15 per share, and offered to pay $1.5bn in cash to reduce Paramount Global debt.

The parties were understood to be near to a deal, however one sticking point, reports said, was an inability to agree on legal indemnity should shareholders sue. Investors have long held objections to a Skydance deal. Skydance and Paramount have been co-financing partners on the Mission: Impossible franchise and Top Gun: Maverick. How Tuesday’s development impacts that relationship remains to be seen. 

The latest twist in an opaque and unpredictable process leaves the industry asking the obvious borader question: what will happen next to Paramount Global?

On Monday Edgar Bronfman Jr., the former CEO of Seagram, vice-chairman of Vivendi Universal and CEO of Warner Music, was reported to be exploring a $2-2.5bn acquisition of National Amusements backed by private equity firm Bain Capital.

This came after reports that independent producer and manager Steven Paul has also entered the fray. Meanwhile the $26bn joint bid from Sony Pictures and private equity giant Apollo Global Management appears to have gone away, although Sony maybe be weighing up at a smaller deal.

One view among industry observers is that Redstone may want to allow her three executives who comprise the office of the CEO to steer the future of the company – at least for the short term.

Last week George Cheeks, president and CEO of CBS, Chris McCarthy, president and CEO, Showtime/MTV Entertainment Studios and Paramount Media Networks, and Brian Robbins, president and CEO of Paramount Pictures and Nickelodeon outlined their initial strategy.

Priorities include $500m in cost savings, selling non-core assets and exploring streaming joint ventures with other media companies.

However without any guidance from Redstone the future of Paramount Global, for now at least, looks as unclear as it has ever been.

Skydance representatives had not responded at time of writing. Shares in Paramount Global dropped 7.8% on Tuesday to $11.04 after trading.