NEW YORK — Entertainment giant Paramount is merging with Skydance, ending the Redstone family’s decades-long career in Hollywood and injecting much-needed cash into a legacy studio struggling to adapt to a changing entertainment landscape.
It is also a sign of the rise of a new power: David Ellison, the founder of Skydance and son of billionaire Larry Ellison, the founder of the software company Oracle.
Shari Redstone’s National Amusements has owned more than three-quarters of Paramount’s Class A voting stock through the estate of her late father, Sumner Redstone. She had fought to retain control of the company that owns CBS, behind such blockbusters as “Top Gun” and “The Godfather.”
Just weeks after Redstone turned down a similar deal with Skydance, he agreed to a deal with very few changes in terms.
“Given the changing nature of the industry, we want to strengthen Paramount for the future while ensuring that content remains king,” said Redstone, chairman of Paramount Global.
The new combined company is estimated to be worth approximately $28 billion.
Skydance, based in Santa Monica, California, has helped produce some of Paramount’s biggest hits in recent years, including Tom Cruise films like “Top Gun: Maverick” and episodes of the “Mission Impossible” series.
Skydance was founded in 2010 by David Ellison and quickly formed a production partnership with Paramount that same year. Ellison will become chairman and CEO of what is being called New Paramount, if the deal is approved by U.S. regulators.
The on-again, off-again merger comes at a turbulent time for Paramount, which unveiled a restructuring plan at an annual shareholders meeting in early June that includes significant cost savings.
Leadership at Paramount has been volatile this year after CEO Bob Bakish was replaced by an “office of the CEO” run by three executives following a series of disputes with Redstone. Four of the company’s directors were also replaced.
But Paramount has struggled to gain traction for years, and the cable business is bleeding. To reach today’s growing streaming audience, the company has launched Paramount+ in 2021but the losses and debts continue to mount.
Summer Redstone National Amusements, his family’s movie theater chain, was used to build a vast media empire that included CBS and Viacom, which have merged and split several times over the years. The companies most recently rejoined in 2019, reversing a 2006 split. The company, ViacomCBS, changed its name to Paramount Global in 2022.
Under Sumner Redstone’s leadership, Viacom grew into one of the country’s largest media giants, including pay channels MTV and Comedy Central and film studio Paramount Pictures.
It’s a company with a rich history and a deep bank of media assets. And Skydance wasn’t the only company to bid for Paramount in recent months. Apollo Global Management and Sony Pictures also made competing offers.
Late last year, Warner Bros. Discovery also made headlines by exploring a possible merger with Paramount. But in February, Warner Reportedly stopped those conversations.