Paramount Faces Uncertain Future After Skydance Merger Collapse

The future of Paramount Global is now uncertain after Shari Redstone unexpectedly ended merger talks with Skydance Media. Redstone, controlling Paramount through National Amusements (NAI), halted the negotiations abruptly, puzzling industry insiders and investors.

The decision shocked many, including J. Christopher Hamilton, a former industry executive and professor at Syracuse University, who believed the deal was progressing well. Paramount’s board had even formed a special committee to recommend the Skydance merger after extensive deliberation. Just before a scheduled vote, Redstone reversed course.

Following the merger collapse, Paramount faces significant internal changes. CEO Bob Bakish departed in late April amid disagreements with Redstone over the Skydance deal. His exit led to the establishment of an “Office of the CEO,” comprising three division heads.

At Paramount’s annual shareholder meeting on June 4, executives announced a plan to cut $500 million in costs, including layoffs, exploring asset sales, and seeking partnerships for streaming ventures. The company has considered selling parts of its business, with BET and Showtime frequently mentioned in sale rumors. Despite this, Redstone has generally preferred keeping the company intact to maximize its value.

Analysts speculate Redstone may still sell all or part of her controlling stake in NAI. MoffettNathanson analyst Robert Fishman suggested Redstone is likely to either maintain the status quo or divest her NAI stake. LightShed Partners’ Rich Greenfield anticipates a pause in Paramount’s M&A activities for the next 12 to 18 months, focusing instead on cost-saving measures and asset optimization.

Skydance Media, known for collaborating with Paramount on blockbuster franchises like “Mission Impossible,” “Top Gun: Maverick,” and “Transformers,” had revised its offer multiple times to address concerns from nonvoting shareholders. The initial terms would have given Redstone $2 billion in cash, but critics argued the deal disproportionately favored her while diluting public stakeholders’ interests. Litigation risks further complicated the transaction, as Redstone would likely need indemnification against lawsuits, a risk Skydance was unwilling to shoulder.