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Shari Redstone left investors guessing about the potential sale of Paramount during its annual meeting and instead stated her “confidence” in the executives who are pitching to keep the Hollywood company she controls independent.
Redstone last year kick-started talks with billionaire David Ellison’s Skydance Media about a merger with Paramount. The talks have been prolonged and chaotic, triggering the exit of Paramount’s chief executive and several board members. But Skydance last week finally agreed a deal with a “special committee” of Paramount board members and advisers.
Redstone who controls about 80 per cent of Paramount through voting stock, has not given her sign-off for the deal to go through. She received the latest deal terms over the weekend but made no comment on the transaction at Tuesday’s annual meeting.
She has been wavering in recent days, according to a person close to the matter. The decision to offload her family’s media empire is emotional for her, the person said.
The future of Paramount remained up in the air as Redstone on Tuesday stated her support for the trio of co-chief executives who were installed after the abrupt departure of former chief Bob Bakish in April.
“Our confidence in the office of the CEO stems from what this team has been able to accomplish with a reduced budget over the last several years,” she told investors at Paramount’s annual shareholder meeting.
“While we recognise that this is not a traditional management structure, we are confident that it will enable them to move quickly,” she added.
These executives — George Cheeks, Brian Robbins and Chris McCarthy — on Tuesday outlined their strategy to Paramount investors. They aim to cut $500mn in costs and are exploring a joint venture for the streaming service Paramount+.
Paramount shares were down more than 4 per cent in afternoon trade on Tuesday. The stock jumped 7.5 per cent on Monday on optimism about a Skydance deal going ahead.
Under the terms agreed between Skydance and Paramount’s “special committee”, the companies would merge through a two-step process.
First, Skydance would pay about $2bn to acquire Redstone’s National Amusements holding company, and she would exit.
Then, Skydance would merge with Paramount through a stock deal.
Skydance is offering to buy out about half of Paramount’s common shareholders at $15 a share, a premium to where the stock trades. This would cost Skydance about $4.5bn and would give these shareholders equity in the newly formed company.
After completion of the deal, Skydance would own about two-thirds of Paramount, while Class B Paramount shareholders would own the remaining third. Skydance would also inject $1.5bn into paying off Paramount’s debt.
Paramount’s common shareholders have complained that the structure of Skydance’s previous offers favoured Redstone, with some threatening lawsuits.
Paramount has been struggling to compete in a costly streaming battle with much larger companies, including Netflix, Disney, Apple and Amazon.
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