CBS’s New Daddy: David Ellison and Skydance

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It had been discussed by multiple news organizations across the U.S. Independence Day holiday weekend, citing sources close to the matter. By Monday morning, it was official.


The widely anticipated acquisition by Skydance Media of the Shari Redstone-controlled National Amusements, Inc., and its subsequent merger with Paramount Global and the new controlling stakeholder in what’s informally being called “New Paramount,” has been approved by Paramount’s board of directors and will move forward.

This will see the end of Redstone family influence at Paramount and its units, including CBS, as she will effectively be succeeded by the man at the helm of Skydance Media, David Ellison.

“New Paramount” is being pitched as a “next-generation media and technology leader,” and the company say the deal “combines the Skydance Investor Group’s  financial resources, deep operating experience, and expertise in cutting-edge technology with Paramount’s iconic IP, deep film and television library, proven hit-making capabilities, and linear and streaming platforms that reach millions of viewers.”

For many in broadcast television, Skydance Media may be an unfamiliar entity. Yet, it has a formidable footprint across the visual entertainment arena and is responsible for the “Hard Knocks” series that puts viewers behind the scenes of a National Football League team on a series-season basis. It is also the company behind the AppleTV+ shows “The Big Door Prize,” “Wondla,” “The Family Plan,” and “Foundation”; “Reacher” and “Jack Ryan” on Prime Video; and “Spy Kids: Armageddon” on Netflix.

Skydance was created in 2010 and takes it name from Ellison’s love of aviation. He is the son of Oracle co-founder Larry Ellison.

Skydance began its business operations from a hangar at Santa Monica Airport. It was during this time that Skydance landed its first significant partnership. And, it just happened to be with Paramount Pictures.

Skydance then moved ahead with the production of feature films, and its first effort was the debut vehicle for Hailee Steinfeld, the Coen Brothers-directed True Grit. By 2011, Skydance was relishing in the success of Mission Impossible: Ghost Protocol, a major box office success. Three years later, Skydance Television was born with the Netflix series Grace and Frankie, as it produced Manhattan for the former WGN America network. The year 2021 saw the launch of Skydance Sports, while 2022’s Top Gun: Maverick torpedoed cinemas out of their post-pandemic malaise.

Today, Skydance’s headquarters is on Olympic Blvd., within view of Santa Monica Airport. And, it is where Ellison is finalizing his blueprint for “New Paramount,” with the goal of becoming “a premier, creative-first destination for storytellers, dedicated to top-quality content.”

Improving profitability at the beleaguered Paramount, which was trading at $11.52 in early trading on Monday and is down by 2.9% in value since the start of 2024, is another key goal for Ellison and Skydance.

“The transaction will stabilize and strengthen Paramount as a world-class media enterprise, with a focus on technological advancements, across multiple entertainment platforms including animation, gaming, film, sports, news and television,” the companies said.

SHELL GAME

At the end of 2019, with the exit of Steve Burke as Chairman of the NBCUniversal Film and Entertainment unit, Jeff Shell took the role. At the time, Shell had oversight of the content creation, programming and distribution engines behind NBCUniversal’s film and network television businesses, including NBC Entertainment, Universal Filmed Entertainment Group (UFEG), Telemundo and NBCUniversal International.

Some 4 1/2 years later, Shell is taking on the role of President of “New Paramount,” serving directly under Chairman/CEO Ellison.

The naming of the former NBCU executive puts an end to the 10-week “Office of the CEO” that Paramount Global created following the departure of longtime Viacom leader Bob Bakish as President/CEO of Paramount Global. Ellison’s desire to merge Skydance with National Amusements, Inc., prompted Bakish’s exit. That saw CBS President/CEO George Cheeks, Showtime/MTV Entertainment Studios and Paramount Media Networks President/CEO Chris McCarthy, and Paramount Pictures/ Nickelodeon President/CEO Brian Robbins agree work together as “co-CEOs” alongside CFO Naveen Chopra and the Paramount Global Board of Directors.

There was no mention of Cheeks, McCarthy or Robbins’ long-term roles in press materials distributed late Sunday, other than that the trio will continue in their current positions through the merger.

In prepared comments, Ellison said, “This is a defining and transformative time for our industry and the storytellers, content creators and financial stakeholders who are invested in the Paramount legacy and the longevity of the entertainment economy. I am incredibly
grateful to Shari Redstone and her family who have agreed to entrust us with the opportunity to lead Paramount. We are committed to energizing the business and bolstering Paramount with contemporary technology, new leadership and a creative discipline that aims to enrich generations to come.”

Gerry Cardinale, Founder and Managing Partner of Skydance Investor Group partner RedBird Capital, added, “The recapitalization of Paramount and combination with Skydance under David Ellison’s leadership will be an important moment in the entertainment industry at a time when incumbent media companies are increasingly challenged by technological disintermediation. As one of the iconic media brands and libraries in Hollywood, Paramount has the intellectual property foundation to ensure longevity through this evolution — but it will require a new generation of visionary leadership together with experienced operational management to navigate this next phase. RedBird is making a substantial financial investment in partnership with the Ellison family because we believe that the pro forma company under this leadership team will be the pace car for how these incumbent legacy media businesses will need to be run in the future.”

BEHIND THE NUMBERS

With the agreement terms OK’d by the Paramount Board of Directors, acting on the unanimous recommendation of the Special Committee and by Class A stock majority holder NAI, Skydance will merge with Paramount in a transaction valuing New Paramount at an enterprise value of approximately $28 billion.

Existing Skydance investors will receive 317 million newly issued Class B shares in New Paramount valuing Skydance at $4.75 billion. based on $15 per Paramount Class B share.

Skydance IG, led by the Ellison Family and RedBird Capital Partners, will invest up to $6 billion to accomplish the following:

  • Offer Class A stockholders other than NAI an election to receive in the merger $23 cash per share or 1.5333 shares of Class B stock of New Paramount.
  • Offer Class B stockholders other than NAI an election to receive in the merger $15 cash per share or one share of Class B stock of New Paramount, subject to proration if Class B elections exceed $4.3 billion in the aggregate (approximately 48% of the non-NAI float as of the date of this release)
  • Use the additional capital to paydown debt and re-capitalize the balance sheet of New Paramount to support strategic initiatives.

The merger consideration represents a 48% premium to the price of the Class B stock as of July 1, 2024, and a 28% premium to the Class A stock on the same date.

By continuing to own shares of the new combined company, Paramount Class B stockholders will have the opportunity to participate in the new company’s “long-term value creation potential.”

Integral to the deal is the definitive agreement signed by NAI and its owners to sell NAI to Skydance IG for $2.4 billion on a cash-free, debt-free basis. Following completion of the transaction, only Skydance IG will hold Class A shares.

Following the close of the transaction and the growth equity investment and assuming full participation in the cash election by Class B stockholders, Class B stockholders will own approximately 30% of the outstanding equity of New Paramount and Skydance IG will own approximately 70% of the outstanding equity of New Paramount.


CBS NEWS AND STATIONS

At present, the roster of CBS-owned and operated television stations is as follows:

  • WCBS-2 and WLNY-55 in New York
  • KCBS-2 and KCAL-9 in Los Angeles
  • WBBM-2 in Chicago
  • KYW-3 and WPSG-57 in Philadelphia
  • KTVT-11 and KTXA-21 in Dallas-Fort Worth
  • WBZ-4 and WSBK-38 in Boston
  • WWJ-62 and WKBD-50 in Detroit
  • KPIX-5 and KPYX-44 in San Francisco-Oakland-San Jose
  • KOVR-13 and KMAX-31 in Sacramento-Stockton-Modesto
  • KCNC-4 in Denver
  • WFOR-4 and WBFS-33 in Miami-Fort Lauderdale
  • WTOG-44 in Tampa-St. Petersburg
  • WUPA-69 in Atlanta
  • WBXI-CD 47 in Indianapolis
  • WJZ-13 in Baltimore
  • WCCO-4 and KCCW-12 in Minneapolis-St. Paul
  • KDKA-2 and WPKD-19 in Pittsburgh
  • KSTW-11 in Seattle-Tacoma