Paramount Global non-executive chair Shari Redstone is set to exit the media giant’s board of directors following completion of the media giant’s $8 billion merger with Skydance Media, an individual familiar with her plans tells TheWrap.
Under the two-step deal, which is on track to close in the first half of 2025, Skydance is set to acquire Redstone’s National Amusements holding company, which controls 77.4% of the Paramount Class A common stock outstanding and approximately 9.5% of the overall equity of the company, before merging with the Hollywood studio.
According to an S-4 filed with the U.S. Securities and Exchanges Commission on Monday, the new Paramount board will consist of up to 13 members who will be designated by Skydance prior to the deal’s closing.
Redstone and her son Tyler Korff have the option of joining the board if requested prior to the closing, per the filing, but don’t plan to, the individual said. Immediately following the transaction, Redstone will own no shares of New Paramount’s Class A common stock and 616,883 shares of Class B common stock.
So long as the Ellisons and RedBird Capital continue to own at least 50% of New Paramount, five board members will be nominees of Ellison, two will be nominees of RedBird, one will be the new president of Paramount and three will be independent. The directors of New Paramount will serve until the next annual meeting of stockholders, their successors are duly elected and qualified or until their earlier death, resignation or removal.
David Ellison will serve as chief executive officer and board chairman of New Paramount, while an individual nominated by Skydance will serve as vice chair. Ellison will serve an initial term as chair for two years following the transaction’s closing or until his earlier death, resignation or incapacitation.
New Paramount has not paid any compensation to its directors or executive officers and is evaluating the specific terms of its director compensation program, but anticipates that non-employee directors will be eligible to receive cash retainer fees and grants of equity awards for their services, in addition to reimbursement of out-of-pocket expenses.
The Ellison family and RedBird will hold 100% of the voting power of New Paramount and approximately 3% of the outstanding shares of New Paramount Class B common stock. The Ellison family will control the voting power of New Paramount indirectly through the Pinnacle entities’ collective 77.5% ownership interest in NAI.
Entities controlled by the Ellison family are expected to directly and indirectly own approximately 48% of the shares of New Paramount’s non-voting Class B common stock outstanding, assuming public stockholders elect to receive the maximum cash consideration in the merger.
Former holders of Paramount common stock will hold approximately 29% to 53% of New Paramount’s Class B shares outstanding, while PIPE equity investors will receive approximately 17% to 38%, depending on the amount of cash consideration that Paramount stockholders elect to receive.
Under the terms of the Skydance deal, new Paramount will have an enterprise value of $28 billion, while Skydance is being valued at $4.75 billion. National Amusements will receive $2.4 billion, including $1.75 billion for the equity and the assumption of $650 million in debt, while non-NAI shareholders will receive $4.5 billion. Meanwhile, $1.5 billion in new capital will be used to pay down Paramount’s $14.6 billion in longterm debt and recapitalize its balance sheet.
Class A shareholders can elect to receive $23 cash per share or 1.5333 shares of Class B stock of new Paramount. Class B shareholders can elect to receive $15 per share or one share of Class B stock of new Paramount, which is subject to proration if those elections exceed $4.3 billion in aggregate. Paramount’s existing public shareholders that elect to receive Class B non-voting shares in lieu of cash will hold approximately 28.3% of the Class B non-voting shares of new Paramount, assuming full participation in the cash election by Class B stockholders. If shares are elected over cash, reducing the cash required to under $4.3 billion, the $1.5 billion of cash going to Paramount’s balance sheet could grow up to a cap of $3 billion.
Oracle co-founder Larry Ellison — who is David’s father and the fifth-richest man in the world — is putting up $6 billion in financing for the Skydance transaction, while the remainder will be backed by RedBird.
Under the deal’s terms, Redstone and other NAI shareholders will receive “certain indemnification rights” relating to the sale capped at a maximum of $200 million.
Thus far, two lawsuits have been filed challenging the deal: one from investor Scott Baker, who alleges the deal could result in $1.65 billion in shareholder damages, and another from LiveVideo.AI, which claims it made a counter-offer to purchase Paramount that was not considered.
The California State Teachers’ Retirement System (CalSTRS)— the second largest U.S. public pension fund with nearly $350 billion in assets — and Mario Gabelli — the largest class A Paramount shareholder behind Redstone whose GAMCO Investors Inc. represents clients that own 5 million Class A shares and 1 million Class B shares — have each filed books and records requests to look into the finer details of the transaction. While not technically a lawsuit in itself, the moves could be an early indicator of lawsuits to come.
Meanwhile, the Employees’ Retirement System of Rhode Island has asked the Delaware court to order Paramount to turn over documents and communications related to its talks with Skydance, due to concerns that Redstone was interfering with the board’s ability to find the best deal for shareholders. That request was rejected in August, but the magistrate’s decision will be reviewed by a more senior judge in November.
If the transactions, which are subject to two automatic extensions of 90 days each in certain circumstances, are not completed by April 7, 2025, Paramount or Skydance may elect to terminate the deal, per the filing.
