Here comes a plot twist: As Skydance Media and RedBird Capital Partners work to close the Larry Ellison-backed takeover of Paramount Global this spring, a consortium of investors who previously bid on the storied media conglomerate is mounting an eleventh-hour $13.5 billion offer.
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| Michael Buckner/Variety |
Variety has obtained a legal letter that is being sent to Paramount’s board Friday, Jan. 24, from Project Rise Partners that outlines a new bid that is higher than an all-cash offer the consortium made during the go-shop window. The group says its terms are vastly superior to the $8 billion deal from Skydance and RedBird.
The letter, prepared by the law firm Baker & Hostetler, notes that in light of “the market’s negative reaction to the Skydance transaction, PRP is now increasing its offer as follows: The offer for the B shares is $19 per share compared to $15 per share in the Skydance offer — a 75% premium and 27% more than Skydance. The PRP offer for the A shares remains the same as the Skydance offer. PRP will add $2B to the balance sheet. This is an all-cash offer with committed financing from credible investors.”
Those investors have largely remained mysterious outside of Daphna Edwards Ziman, president and co-chairman of film and lifestyle TV network Cinémoi, and Moses Gross, founder and CEO of real estate company ANM Group. (Gross is the CEO of Malka Equities, the umbrella company that signed a $10 billion commitment on behalf of the investors.) But sources say Project Rise Partners is also backed by titans of industry comparable to Larry Ellison and includes at least one of the richest men in the world and as well as a company partner that is a pioneer in the satellite industry. Ziman and Gross fronted the previous offer, which they say was never presented to the board.
Reps for Skydance and Paramount Global declined to comment. A spokesperson for the Paramount board’s special committee established to vet offers did not immediately respond to a request for comment.
A publicly traded corporation is typically legally bound to consider any legitimate offer of value that could benefit shareholders. The Project Rise investors fired off a legal letter in October 2024 claiming that Paramount’s special committee violated its fiduciary duty to shareholders by neglecting to consider the group’s previous $8.5 billion bid for the company. Project Rise Partners’ $13.5 billion offer includes $5 billion for restructuring of the debt.
According to an SEC filing, a member of Paramount’s Special Committee held a call with a Project Rise Partners representative on Aug. 15, which was inside the go-shop window. (That window closed on Aug. 21.) But the SEC filing says the two sides did not discuss terms during the call and that the group’s acquisition proposal was only submitted on Aug. 26, after the window closed.
The Baker & Hostetler letter — addressed to Paramount board members Shari Redstone, Barbara Byrne, Linda Griego, Judith McHale and Susan Schuman — states that the company’s Class B shareholders “would own 50% of the equity versus 30% in the Skydance offer. The PRP offer includes an independent board and normal corporate governance. The board committees Skydance plans to eliminate would be retained. B shareholders would receive a vote for the first time in the company’s history.”
Project Rise Partners additionally claims that it plans to grow Paramount Global’s headcount, whereas the Skydance and RedBird partners have indicated more cuts would come under a Skydance-Paramount merger.
Larry Ellison, also one of the world’s richest men, is facing regulatory hurdles with the Paramount-Skydance merger that would see his son, Skydance CEO David Ellison, running the combined media assets. President Donald Trump’s new FCC chair Brendan Carr has publicly raised concerns about the merger. The elder Ellison, founder of Oracle who has a net worth of more than $200 billion, has been a longtime supporter of Trump’s and has been shoring up his relationship with the president. He traveled to the White House on Tuesday (Jan. 21) to announce a separate AI Stargate deal that industry observers saw as part of an effort to keep the Paramount-Skydance merger on track. That prompted Elon Musk to mock Ellison on X, writing: “they don’t actually have the money” and have “well under $10B secured.” Separately, Trump has indicated that he would be open to Larry Ellison or Musk buying TikTok.
The Skydance-RedBird $8 billion deal to merge with Paramount has been controversial among shareholders, primarily because it values Skydance at roughly $4 billion. The new Project Rise Partners bid questions that valuation. “Skydance reported $25M in EBITDA in 2023, and Paramount purchased Skydance for $4.75B, or approximately 200x trailing earnings,” the Jan. 24 letter says. “There are no market benchmarks that justify the Skydance valuation, and no independent bidder would pay that price.”
Meanwhile, politicians like Rep. John Moolenaar (R-Mich.), chair of the House China Select Committee, have raised concerns about China’s role in the Skydance deal because Tencent, a company with ties to the Chinese military, will have a small stake in the media giant, whose assets include everything from CBS News to the Paramount film and TV studio and networks including Nickelodeon and MTV.
“The Board and its advisors appeared so eager to conclude a transaction with Skydance, no one appears to have fully accounted for Skydance’s foreign ownership,” the Project Rise Partners letter says. “The Pentagon recently placed Tencent on a list of firms alleged to be helping the Chinese military. Regulators will scrutinize the proposed transaction given the heightened concern over Chinese control of consumer platforms and access to personal data. If the Board and its advisors missed or ignored such a serious red flag, shareholders will naturally question the thoroughness of the Board’s due diligence. By extension, ineffective diligence might explain the unreasonable valuation paid for Skydance, the company acquiring Paramount.”
Paramount and Redstone, whose National Amusements Inc. is the controlling shareholder of Paramount, have a binding deal with Skydance Media and may only be able to back out if regulators stop the merger. A source familiar with the process told Variety that is highly unlikely. But the Baker & Hostetler letter claims that the Paramount board eliminated an option to consider superior bids from its sale process.
“In the public company context, most merger agreements include a standard fiduciary out that allows a new bidder with a superior offer to pay the breakup fee to compensate the original bidder for opportunity and other costs,” the letter says. “For unknown reasons, the Board or its legal counsel specifically excluded a fiduciary out which harms B shareholders and benefits Skydance. … Fiduciary outs enable boards to terminate a transaction agreement if a superior offer arrives before the deal is approved by the shareholders and closed. If the agreement omits such an exit clause, the Board’s decision may be deemed ‘preclusive and coercive.’ There is no discernable rationale for that unnecessary, one-way value transfer to Skydance. These ‘deal protection devices’ do not protect shareholders.”
The letter also stresses that Paramount directors have a duty of loyalty to shareholders, not to advisers or Skydance.
“Because of the Board’s decision to eliminate the fiduciary out, the outsized $400M breakup fee benefits Skydance in the case of a regulatory block but does not benefit B shareholders if there is a superior offer. After canvassing the market for over nine months, the Board concluded that Skydance was the only actionable, fully financed offer available,” the letter continues. “Paramount Directors breached their duty of loyalty by crafting a merger agreement favorable to the buyer and not the seller in this transaction.
A special committee of Paramount Global’s board of directors says it is “bound” by a pending agreement to merge with Skydance Media and will not consider an 11th-hour offer from a rival bidder.
In a statement provided to Deadline, a spokesperson for the committee formed last year to evaluate opportunities and steer a merger, said investment group Project Rise Partners effectively arrived too late to the party.
“The transaction agreement between Paramount and Skydance Media enabled the Special Committee to pursue a superior proposal during the now-expired 45-day go-shop period, during which representatives of the Special Committee contacted more than 50 third parties to determine whether they had an interest in making a proposal to acquire Paramount,” the statement said. “Project Rise Partners did not make a proposal during such period, nor during the prior seven-month sale process for Paramount. It is unclear what PRP’s objectives are; however, Paramount is bound by its agreement with Skydance Media and there will not be any engagement with PRP in contravention of such agreement.”
The Paramount-Skydance deal was set last July after a months-long saga, with numerous parties looking into throwing their hat into the ring for the century-old Hollywood mainstay. Barry Diller, Sony Pictures Entertainment, private equity giant Apollo and a group of investors led by Seagram heir Edgar Bronfman Jr. were among the suitors. Skydance was able to leverage its longstanding ties with Paramount as a co-finance partner. CEO David Ellison, backed by his father, Oracle co-founder Larry Ellison, was also seen as having significant resources and passion to invest in the company’s core film, TV and streaming businesses.
After multiple offers from Skydance, the company and Paramount agreed on a two-step transaction worth about $8 billion. The dual-class structure of Paramount stock made the fine points of the deal tricky to nail down, with a number of stakeholders accusing controlling shareholder Shari Redstone of furthering her own interests at the expense of holders of Class B shares. A number of notable Class B shareholders voiced their disapproval of earlier versions of the deal, though the complaints diminished as Skydance sweetened its offer.
Lawyers for Project Rise Partners sent the committee a letter on Friday advising them that the body was obligated to consider its offer, which principals described as superior to the $8 billion Skydance deal. PRP’s offer was “increasing,” the letter said, to $19 per Class B share, compared with the $15 offered by Skydance, according to a report by Variety. (Axios last October had also reported on PRP agitating for consideration of its post-deadline bid.)
Curiously, the Friday letter also drew a contrast with Skydance in terms of staffing. It asserted that PRP (whose backers include Daphna Edwards Ziman, co-chairman of TV network Cinémoi, and real estate finance exec Moses Gross) would add to Paramount’s headcount despite the widespread cutbacks reshaping the entertainment business. (Paramount itself shed 15% of U.S.-based workers in recent months.)
Despite plans to invest significant resources from the Ellisons and minority partner RedBird Capital in bulking up Paramount’s streaming platforms and studio operations, job cuts are expected at Paramount once Skydance assumes control. Among other things, the company faces significant challenges in managing its sizable linear TV assets, and last year signaled as much to Wall Street when it took a $6 billion write down on the value of its cable networks.
When the Skydance bid was first accepted by the special committee last summer, the agreement stipulated that a 45-day “go-shop” window would enable the board to explore alternatives. As an SEC filing affirmed this month, representatives of Project Rise Partners were in contact with the special committee but their proposal did not get submitted until several days after the go-shop period expired.
The idea of a last-minute twist to the Paramount merger melodrama is migraine-inducing to some observers. “It’s just silliness,” one person familiar with the merger process said of the PRP saber-rattling. The entreaties by the investor group come as the deal is falling under fresh scrutiny from regulators at the Federal Communications Commission, which has taken issue with political coverage by Paramount’s CBS News.
FCC Chair Brendan Carr, appointed to the post by President Trump, has revived complaints of “news distortion” by CBS due to its editing of a 60 Minutes interview with former Vice President Kamala Harris. Trump also has filed a lawsuit in Texas over the Harris segment, prompting internal discussion at Paramount about ways to settle the suit in order to allow the merger to proceed to a close. Trump’s objections are creating these potential roadblocks despite the fact that Redstone and Ellison are both longtime supporters of the president, with the latter appearing last week at a White House news conference about a major new AI initiative.
Reps for Redstone, Paramount Global and Skydance declined to comment when contacted by Deadline.
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Originally published: January 25, 2025.
