Skydance’s David Ellison nearing deal for Paramount after sweetened offer

LOS ANGELES – David Ellison’s Skydance Media is close to clearing a major hurdle in its pursuit of Paramount Global.

The media giant’s committee of independent board members has signaled its approval for Ellison’s takeover of the storied company, according to three people familiar with the situation who were not authorized to comment.

Formal approval by Paramount’s special committee could come early this week, one of the knowledgeable people said.

However, the Skydance deal is not entirely stitched up. The arrangement still lacks the consent of Paramount’s controlling shareholder, Shari Redstone, sources said. Her support is key for any deal to move forward.

Representatives for Paramount were not immediately available to comment.

Redstone’s family owns 77% of the controlling shares of Paramount Global through their holding company National Amusements Inc., giving the heirs of Sumner Redstone enormous sway over the future of the struggling owner of Paramount Pictures, MTV and Nickelodeon.

Complicating matters, as the Skydance sale process has dragged on, Redstone has fielded interest from at least two other interested buyers for National Amusements.

Late last week, Redstone was said to be mulling those offers, including one which was higher than the nearly $2 billion for National Amusements and its voting shares in Paramount that Skydance and its partners offered the family.

Redstone has long preferred the Skydance proposal because it would keep intact the media company that her father spent decades building into a behemoth with broadcast giant CBS, the legendary Melrose Avenue movie studio and cable TV channels, including MTV, BET, Nickelodeon and Comedy Central.

To win the approval of the special committee, Skydance, joined in its bid by RedBird Capital Partners and private equity firm KKR, last week proposed setting aside funds to buy out certain non-voting B-class stockholders at $15 a share during a second phase of the transaction. The parties worked over the weekend to hammer out such provisions.

Paramount shares rose 7% to $12.71 in midday trading.

Further boosting the bid for Paramount, Oracle’s billionaire chairman Larry Ellison has agreed to help his son get the deal over the finish line, one of the sources said.

Paramount’s shareholders have long protested the second phase of the deal, when Ellison intends to fold his company, Skydance, into Paramount. Shareholders of Paramount have said that absorbing Skydance would dilute their shares. Non-voting shareholders have also complained that the Skydance deal would provide a premium to Redstone and her family for their voting shares.

The movement in the deal talks comes less than a month after Skydance’s exclusive negotiating window expired.

Since then, Paramount board members agreed to consider a rival $26-billion bid from Sony Pictures Entertainment and Apollo Global Management, but those talks lost momentum in recent weeks, knowledgeable people said.

Sony, which has long been known as a cautious buyer, began to lose interest in the Apollo bid, believing it was too expensive, particularly given the struggles of Paramount’s cable channels that still provide the bulk of the company’s operating income.

Sony’s Tokyo-based parent company hasn’t forgotten how it overpaid for the Sony/Columbia-Tri Star deal decades ago, so the company was leery about a repeat scenario with Paramount, one of the sources said.

The Wall Street Journal first reported that Redstone was considering other offers for National Amusements. On Monday, CNBC reported the Skydance deal was close to winning approval.