Skydance’s David Ellison, Jeff Shell, and RedBird Capital looked to woo Wall Street to their planned merger with Paramount highlighting $2 billion in running cost synergies and streaming break-even in 18 months or sooner if a partner emerges. The possibility of a tech ally came up consistently on a webcast with Wall Street analysts today, as well as international streaming agreements in the works under Par’s current CEO trio — but no details on either.Shell will oversee the combined company under CEO David Ellison. RedBird’s $1.8 billion cash injection in the deal will be the Gerry Cardinale firm’s biggest investment ever.Other interested parties have 45 days to make a better offer. If one “emerges from the woodwork,” the Skydance camp said they will get a hefty $400 million breakup fee. Edgar Bronfman Jr. is seriously interested. Barry Diller has been eyeing Paramount as well.Redbird partner Andy Gordon said Paramount’s board “has done a full and exhaustive and fair process to land the transaction with us [but] we believe it’s appropriate, if anyone comes out of the woodwork, to give them 45 days to see what happens.” The so-called “go shop” period was said to be a deal point requested by Shari Redstone.Paramount shares popped earlier premarket as the deal was confirmed late last night but dipped more than 5% in early trading and are now down about 2.5%. Gordon said at the presentation that the deal “allows investors to ride along with the upside” and opinions will be coming out soon, but, at first blush, the Street is not thrilled.This is an extremely complex transaction due to the fact that Paramount is a public company controlled by Redstone family holding National Amusements. NAI owns the majority of the voting shares but only a small overall economic interest, which, instead, is dispersed among a big cohort of non-voting investors.Redstone could simply sell her ownership stake, putting another party at Paramount’s helm come what may. She gets bought out either way. But she said she favored Ellison’s offer since it’s also a merger that would keep the company together and create a larger entity with a better shot in a competitive landscape — something the Ellison camp emphasized today.Basically, the two classes of stock made it possible for his relatively small company to buy control of a much bigger one, owner of a major Hollywood studio and a storied broadcast network in CBS.“I really want to thank Shari Redstone and the Redstone family for entrusting us with this incredibly iconic company. We are incredibly excited for this opportunity and we look forward to continuing to build Paramount,” Ellison said today.In the presentation, backed by a series of slides, Skydance said “detailed, bottom-up initiatives have the ability to produce $2bn+ run-rate cost efficiencies” repping about 7% of the pro forma cost structure of what is being called New Paramount.It believes the savings can be achieved without hurting revenue growth.About 50%+ of the “efficiencies” will be delivered by year one. Execs on the call said they expect the deal to close in the third quarter of 2025.Meanwhile, co-CEOs Brian Robbins, George Cheeks and Chris McCarthy will continue to steer the ship, at least on paper. Those execs already outlined $500 million in cost cuts that the Skydance folks said is included in the total.Skydance anticipates restructuring and integration costs of $1.6 billion.The deal has been many months in the making and died once when Redstone walked away. Skydance then met her outstanding concerns, a big one being an agreement to take on legal liabilities in the case of potential shareholder lawsuits.The first step would see the Skydance consortium led by Skydance Media shareholders including the Ellison family and RedBird Capital to acquire 100% ownership of NAI at $1.75 billion equity value or $2.4 billion enterprise value.David Ellison’s father is billionaire Oracle co-founder Larry Ellison. In the talk of tech hookups, its not clear if or how giant Oracle will be involved. But Ellison and Shell both said today that the combined company intends to be a tech streaming leader and will bring in a tech partner, or partners.“We need to make that transition to being a tech hybrid,” Ellison said, just as “you have watched tech companies move into the media space.”Likewise, international agreements alluded to by the current regime previously and execs today would also benefit Paramount+.After the acquisition of NAI, Skydance would make a $1.5 investment into Paramount to help pay down debt and recapitalize, and Paramount would acquire Skydance in an all-stock deal that values Ellison’s company at $4.75 billion.To appease other Par shareholders, Skydance is offering to buy out all non-Redstone Class A holders – these are other holders of the voting stock and there aren’t that many. It will offer to buy out some Class B, or non-voting shares, as well, for up to a total of $4.3 billion. It’s offering $23 for voting and $15 for non-voting shares. Shareholders can also keep the shares and go for the ride.The slides also showed combined pro forma revenue rising from and estimated $32.6 billion in 2025 to $32.9 billion in 2026 and $33.5 billion in 2027. Adjusted OIBDA (operating income before depreciation and amortization) is looking like an estimated $3.4 billion in 2025, $4.1 billion in 2026 and $4.5 billion in 2027, including cost efficiencies.Importantly, Par is expected to deleverage significantly over that time period. Paramount is currently weighed down by a heavy debt load that threatens its credit rating.
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