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Change of control at Paramount a strong possibility

Control of Paramount Global, the current owner of the Ten TV Network in Australia, is looking at changing after the company’s shares leapt 15% late in Wednesday’s Wall Street trading session.

While they came off 2.2% in after hours trading, the market story is that US media investment house, Skydance’s founder, David Ellison is talking to Shari Redstone, whose company, National Amusements controls Paramount.

US media and business websites said Skydance is in “pole’ position to grab a majority stake of National Amusements which in turn will give control of Paramount Global.

National Amusements operates a movie theatre circuit and also controls more than three-quarters of Paramount’s voting shares. It was set up by Ms redstone’s father, Sumner Redstone decades ago.

Bloomberg reported just before the 4pm market close that a tentative deal had been reached between Sjydance founder and major shareholer, David Ellison, (a longtime business partner on film and TV projects with Paramount) and Ms Redstone.

Other reports said there is no actual takeover agreement in place but the two sides have agreed to a 30 day exclusive negotiating period with a framework reportedly in place to progress to a final agreement.

Skydance first emerged as a possible bidder last December and a rival to the then frontrunner, Warner Bros Discovery, as well private equity giant Apollo Global.

Both wanted to break up Paramount, Ms Redstone wouldn’t agree, so both deal so both departed the scene.

Paramount Global’s finances (debt, streaming losses, negative free cash flow) are weak – its market value is less than $US10 billion and its the tiddler of the major US studio/TV businesses.

Last week, big ratings agency S&P lowered the company’s bonds to junk status, cited the toll of ongoing pay-TV weakness and the shift toward a more competitive and more uncertain streaming future.

The Skydance deal would require two steps: first the acquisition of NAI, and then merging Skydance and Paramount.

Skydance CEO David Ellison is the son of billionaire Oracle co-founder Larry Ellison and the brother of Annapurna Pictures founder Megan Ellison (Making both of them what American investors call, Nepo Babies – the offspring of very wealth parents).

Beyond the family, Skydance’s investors include private equity firms KKR and RedBird Capital, Chinese entertainment giant Tencent and South Korean media conglomerate CJ ENM.

The could be problems in the bid from the presence of Chinese internet and media giant, Tencent as an investor in Skydance, as well as Redbird (which is a private investment vehicle for UAE Deputy Prime Minister Sheikh Mansour bin Zayed Al Nahyan who also owns Manchester City in the UK but is being blocked from supporting a deal to buy the Telegraph newspaper in London).

Both could be forced to drop out of any Skydance deal for Paramount. 

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