Paramount stock and bonds snapped up on report deal with Skydance is back on

By Ciara Linnane and Bill Peters

The deal between Shari Redstone and Skydance Media that was scrapped a few weeks ago has been revived

Investors snapped up shares and bonds issued by Paramount Global Inc. on Wednesday, after a report suggested the on-again, off-again courtship between Shari Redstone, Paramount and Skydance Media is back on, after the three sides reportedly have reached a preliminary merger deal.

The news was reported by the Wall Street Journal late Tuesday. Under that agreement, the Journal reported, Skydance would buy Paramount's controlling company, National Amusements, which Redstone runs, and then merge with Paramount, which owns CBS, MTV and its namesake studio and streaming platform.

Paramount (PARA) declined to comment. Skydance and National Amusements did not immediately respond to requests for comment.

National Amusements last month ended talks with Skydance, according to reports. The Los Angeles Times reported that National Amusements nixed the deal after Skydance's efforts to sweeten the bid for shareholders-some of whom complained the deal didn't reward them enough-dinged the value of National Amusements, leaving Redstone unhappy.

Skydance-a production company behind some of Tom Cruise's "Mission Impossible" films-is led by David Ellison, the son of Larry Ellison, co- founder and chief technology officer at Oracle Corp. (ORCL)

The news comes a day after a New York Times report that Paramount had launched talks with billionaire Barry Diller and his IAC Inc. (IAC) media company. The Times said Diller had signed non-disclosure agreements with National Amusements after the initial talks with Skydance fell through.

Two other parties that were reported by the Wall Street Journal to have an interest in Paramount were former media executive Edgar Bronfman Jr., who would have the backing of private-equity firm Bain Capital, and Hollywood producer Steven Paul.

Raymond James, which has a market perform rating on Paramount's stock, said Wednesday quoting Yogi Berra that "it ain't over 'til it's over."

"Until the Skydance deal seemingly collapsed 3 weeks ago, we had weighted Skydance the most probable outcome, followed by PARA going it alone, followed by any and all other deals," analysts Ric Prentiss and Brent Penter wrote in a note to clients.

"Despite the twists and turns, we seem to be back on that path. Perhaps, as the company contemplated the difficult reality of going it alone, it once again became clear that it needed a strengthened balance sheet, even at the price of equity dilution," they wrote.

The stock was up 8%, while the bonds saw net buying in strong volumes through the morning, as the following chart from data solutions provider BondCliQ Media Services shows.

Spreads on the company's long bonds were about 25 basis points tighter and prices were up about 3 points, according to a market source.

The bonds have seen net buying across the curve in the last two weeks.

Paramount has almost $15 billion worth of outstanding bonds, the bulk of which comes due in 2043.

Paramount and other media companies have cut costs, laid off staff and sought to combine as they try to find a path to profits for their streaming services and compete with Netflix Inc. (NFLX), which some analysts have already crowned the winner of the streaming wars that began more than a decade ago. Studios have pulled back on TV production in the wake of last year's strikes.

Sony (SONY) and private-equity firm Apollo Global Management Inc. (APO) also made their own offer for Paramount in May.

The stock is down 21% in the year to date, while the S&P 500 SPX has gained 16%.

-Ciara Linnane -Bill Peters

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07-03-24 1216ET

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