Skydance reaches new deal to buy controlling Paramount stake, sources say

By Dawn Chmielewski

LOS ANGELES (Reuters) -Shari Redstone's National Amusements has reached a preliminary deal to sell its controlling interest in Paramount Global to David Ellison's Skydance Media, three sources familiar with the matter told Reuters on Tuesday.

The news sent Paramount shares up 9% in after-hours trading.

Under the tentative agreement, Skydance would pay $1.75 billion for National Amusements, which owns 77% of the voting shares of Paramount. The deal includes a 45-day "go-shop" period, in which other bidders could submit offers, according to the Wall Street Journal, which first reported the news on Tuesday.

Others who have expressed interest in acquiring National Amusements include film producer Steven Paul, Seagram heir Edgar Bronfman Jr. and IAC's Barry Diller.

One source with ties to a potential bidder said it was unlikely the others would abandon their efforts, in part because they may put forth bids that are more lucrative for Paramount shareholders or Redstone personally.

National Amusements has referred the Skydance deal to a special committee of Paramount's board for review, according to two people familiar with the matter. Under the new arrangement,

National Amusements is not mandating that the Paramount merger be approved by a majority of non-Redstone shareholders, a previous sticking point, the Wall Street Journal said.

The sale is envisioned as the first part of a two-phase transaction, in which the smaller independent studio Skydance would merge with Paramount, home of the namesake film studio, CBS and cable networks such as MTV and Nickelodeon.

The century-old Paramount Pictures is known for films such as "Titanic," "The Godfather" and the "Transformers" franchise. Skydance has co-produced Paramount movies such as "Top Gun: Maverick" and "Star Trek Into Darkness."

Paramount declined to comment on a possible deal with Skydance, and a spokesperson for the special committee could not immediately be reached for comment.

Ellison, the son of Oracle co-founder Larry Ellison, has spent months in pursuit of Paramount, a combination that Redstone, daughter of late media tycoon Sumner Redstone, enthusiastically embraced, according to multiple sources. She nonetheless nixed the deal, after Skydance adjusted its offer to provide more money for other shareholders.

National Amusements re-engaged with Skydance over the past week, even as it continued conversations with other interested parties, according to one source familiar with the talks.

Redstone always saw a strategic value in the combination of Paramount and Skydance, the source said.

National Amusements owns movie theaters in the United States, Britain and Latin America, and holds the Redstone family's 77% of Paramount's class A voting stock.

(Reporting Dawn Chmielewski in Los Angeles ; Additional reporting by Harshita Mary Varghese and Juby Babu; Writing by Lisa Richwine;Editing by Shinjini Ganguli and Lincoln Feast)