Larry Ellison Will Hold Controlling Stake in Paramount Global With Skydance Merger, Filing Shows

September 5, 2024 @ 12:23 PM

Oracle co-founder Larry Ellison is set to acquire a controlling majority stake in Paramount Global when his son David Ellison and RedBird Capital Partners close an $8 billion deal to acquire the Hollywood studio, according to a new regulatory filing with the Federal Communications Commission.

The filing, which is required due to the sale involving the transfer of broadcast licenses related to the CBS Television Network and local TV stations, notes that the older Ellison will own 77.5% of National Amusements through a trust and series of corporations. The remainder of NAI will be owned by RedBird Capital Partners founder Gerry Cardinale’s RB Tentpole LP, which will control 22.5% if the deal goes through.

The two-step deal, which will see the younger Ellison’s Skydance Media acquire Paramount controlling shareholder Shari Redstone’s National Amusements before merging with the media giant, is expected to close in the first half of 2025, subject to regulatory approvals and other customary closing conditions. David Ellison will serve as Paramount’s chairman and CEO.

Larry Ellison — the fifth-richest man in the world — is putting up $6 billion in financing, while the remainder will be backed by RedBird Capital Partners.

Under the terms of the Skydance deal, new Paramount will have an enterprise value of $28 billion, while Skydance is being valued at $4.75 billion. National Amusements will receive $2.4 billion, including $1.75 billion for the equity and the assumption of $650 million in debt, while non-NAI shareholders will receive $4.5 billion. Meanwhile, $1.5 billion in new capital will be used to pay down Paramount’s $14.6 billion in longterm debt and recapitalize its balance sheet.

Class A shareholders can elect to receive $23 cash per share or 1.5333 shares of Class B stock of new Paramount. Class B shareholders can elect to receive $15 per share or one share of Class B stock of new Paramount, which is subject to proration if those elections exceed $4.3 billion in aggregate.

Paramount’s existing public shareholders that elect to receive Class B non-voting shares in lieu of cash will hold approximately 28.3% of the Class B non-voting shares of new Paramount, assuming full participation in the cash election by Class B stockholders. If shares are elected over cash, reducing the cash required to under $4.3 billion, the $1.5 billion of cash going to Paramount’s balance sheet could grow up to a cap of $3 billion.

According to the filing, the new owners intend to “preserve and enhance the legacy” of the CBS TV network and the company’s 28 owned and operated local stations and ensure that news, sports and entertainment content across the company “embodies a diversity of independent viewpoints.”

“With an improved balance sheet, new Paramount will be able to make strategic investments in the legendary newsgathering and reporting efforts of the national CBS television network and the company’s O&O local stations. These investments will ensure that both the national network (which reaches all television markets) and the O&Os will continue to serve as trusted sources of news,” the filing states. “The investment in the CBS television network similarly will help ensure popular live sports and highly rated entertainment programming remain available to viewers over-the-air and will benefit CBS affiliate stations.”

The filing adds that the Skydance deal will “not result in any diminution of competition in the broadcasting marketplace.”

The Skydance deal has faced pushback from investors over concerns that it would prioritize Redstone at the expense of Paramount’s minority shareholders.

Mario Gabelli, the largest class A shareholder behind Redstone whose GAMCO Investors Inc. represents clients that own 5 million Class A shares and 1 million Class B shares, has filed a books and records request seeking more information about the specifics of the deal.

Meanwhile, the Employees’ Retirement System of Rhode Island has asked a Delaware court to order Paramount to turn over documents and communications related to its talks with Skydance, due to concerns that Redstone may be interfering with the board’s ability to find the best deal for shareholders.

Additionally, Paramount investor Scott Baker has filed a proposed class action lawsuit, arguing the Skydance deal is a breach of Redstone and the Paramount board’s fiduciary responsibilities and that non-NAI class B shareholders will suffer $1.65 billion in damages from the Skydance deal.

Shares of Paramount have fallen 23% in the past year and 27% year to date, but are up 2.3% in the past six months.