The production company behind it Top Gun: Maverick could rise to the top of Paramount’s content mountain.
Skydance Media, the production studio owned by Larry Ellison’s son David, is in advanced negotiations to acquire a significant stake in Paramount Global. The exact nature of the deal has not yet been determined, nor whether Skydance and its private equity backers RedBird Capital Partners and KKR will take a majority stake or not. But talks between the two sides are progressing quickly after Skydance and Paramount reached an agreement last week to enter into exclusive talks.
If the deal goes through, it would cement David Ellison’s rise to Hollywood stardom.
For an upstart like Skydance, buying Paramount Global, usually considered a struggling company, would be a coup. Skydance would own Paramount’s storied library, which counts real estate as The Godfather And Titanic, the entire CBS brand and its valuable news portal, several cable channels such as Nickelodeon and Comedy Central, and a streaming service with 67 million subscribers in Paramount+ are among its assets. Closing the deal would mean that the wealthy son of the world’s ninth richest man – who would still provide some of the capital needed to finance the deal – may have really made it in Hollywood.
Ellison first appeared in the film business as a fresh-faced 23-year-old who many studios and executives wanted to lure away for some money. Instead, he took his family’s money and invested it in building a successful company that developed a long-standing relationship with Tom Cruise, produced dozens of films and, most recently, branched out into video games. Now Ellison is poised to strike a deal with Paramount Global for one of the last remnants of Hollywood’s Golden Age.
Paramount and KKR declined to comment. RedBird and Skydance did not respond to a request for comment.
The current framework of the transaction would be structured so that Skydance Group would acquire Shari Redstone’s holding company, National Amusements, which controls approximately 77% of Paramount Global’s voting shares, but significantly less than 10% of its total capital. According to Bloomberg, Skydance and Redstone already have an agreement in principle. The deal would see Skydance and its partners pay over $2 billion for National Amusements, effectively giving them control of Paramount. They are also in discussions to purchase a certain number of common shares. According to CNBC, the combined number of shares would give Skydance and its partners control of about 45% to just over 50% of Paramount.
On Thursday, it appeared as if negotiations between the two groups were gaining momentum. Executives from Paramount and Skydance are scheduled to meet sometime next week, according to a CNBC report on Thursday, while investment firm RedBird, a specialist in the media sector, will begin due diligence on Paramount.
Skydance would then merge with Paramount Global. In that case, the new company would be led by Ellison, taking over a senior role for former NBCUniversal CEO and current RedBird executive Jeff Shell.
Ellison and Paramount have a longstanding relationship. When the young scion was just gaining a foothold in Hollywood, he financed and produced several Paramount films, including Star Trek And Mission impossible Movies. Eventually he became self-employed and founded Skydance in 2010. Since then, the company has produced several major hits including Top Gun: Maverick And Mission Impossible: Dead Reckoning Part One.
In the early days, it was hard to get rid of the rich kid aura, Ellison said. “There was a time when people only saw us as money, and we knew that,” he said New York Times in 2021. “But there has been a shift. Our content, ideas and implementation have become more important than our capital.”
Since then, Skydance has expanded to include animation, video games and VR content. It has also started to attract some of the best talent in the industry. The animation department is headed by John Lasseter, a man already familiar with Silicon Valley’s encroachments on Hollywood, having co-founded Pixar with Steve Jobs. Cruise, who has worked with Skydance on several projects, praised Ellison effusively in 2015 GQ Profile. Skydance’s video game division has secured licenses for major IP franchises such as Marvel and War of stars.
If Skydance succeeds in acquiring Paramount Global, it would not only be a personal triumph for Ellison, but also a business triumph for an independent film studio that struck a deal with a legacy media company as a buyer rather than a seller. In most cases in the history of the entertainment industry, successful independent companies were eventually acquired by the giants that dominated the industry. One need look no further than Pixar, where Lasseter made his name and which was purchased by Disney in 2006 for $7.4 billion. Skydance could also have been bought by a technology company, just as Amazon bought MGM for $8.5 billion in 2021.
Whether or not a Skydance deal represents the best option for Paramount shareholders remains to be determined. Paramount had an independent committee made up of eight of its 11 board members tasked with finding the best possible deal for the company. On Thursday, three members of this committee and another board member resigned from their positions. Meanwhile, several shareholders are outraged by the deal, which could lead to a potential boardroom showdown. If the deal falls through, Redstone and Paramount’s board may have to settle for another deal, which currently appears to be a $26 billion cash offer from private equity firm Apollo.
This story was originally published on Fortune.com