(Bloomberg) — Paramount Global, the parent of CBS and MTV, is getting closer to a deal to merge with independent producer David Ellison’s Skydance Media.
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Shari Redstone, Paramount’s controlling shareholder, has reached a tentative agreement to sell her stake to Skydance, people with knowledge of the situation said. In addition, Paramount and Skydance have agreed on the broad framework of a deal to combine, according to the people, and will use a 30-day window of exclusive talks to work out the details.
Paramount and Skydance declined to comment, while Redstone didn’t respond to a request for comment.
Shares of Paramount have declined for years, reflecting the company’s loss of TV viewers to other forms of entertainment and its costly efforts to develop a streaming service. The company had a market value of $9.17 billion at the close of trading Wednesday.
That’s led Redstone to weigh a sale of the company to Ellison — the son of Larry Ellison, the billionaire co-founder of Oracle Corp. The Redstone family’s National Amusements holds a near 80% voting stake in Paramount, making their approval the linchpin of any deal.
Ellison’s company, Skydance, has partnered with Paramount on films including Top Gun: Maverick. But an outright merger with Paramount would be more complex, and there’s no assurance they’ll reach an agreement.
In addition to acquiring Redstone’s stake in Paramount, the parties will have to construct a deal that satisfies Paramount’s other stockholders.
Paramount executives said during a March investor conference that their objective is to “create value for all of our shareholders.”
The potential terms of a deal couldn’t be determined, and any agreement is subject to approval by Paramount’s board. The Wall Street Journal reported earlier Wednesday that Paramount and Skydance had agreed to enter exclusive talks.
Paramount has attracted other suitors, including independent media mogul Byron Allen, Apollo Global Management Inc. and Warner Bros. Discovery Inc.
In agreeing to exclusive talks with Skydance, Paramount’s board is favoring Skydance over a recent $26 billion all-cash offer from Apollo, the Journal reported earlier. Paramount has about $14.6 billion in long-term debt.
Paramount’s nonvoting shares rose 15% to $13.52 at the close in New York, their biggest one-day gain since November.
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