What’s Next for Paramount After Skydance Merger Disappears

The future of Paramount Global (PARA) now hangs in the balance after Shari Redstone, who controls Paramount through her family’s holding company National Amusements (NAI), ended merger talks with Skydance Media.

“I was surprised,” J.Christophe Hamilton, a former entertainment industry executive and professor at Syracuse University, told Yahoo Finance. “The deal seemed to be quite advanced.”

Hamilton wasn’t the only one shocked by the decision. An independent special committee of Paramount’s board recently recommended the economics of the Skydance deal after months of back-and-forth — and was even expected to vote on the merger just before Redstone’s ouster.

Investors also took notice, with Paramount shares falling about 8% after the decision was made public.

“Immediately, we heard industry executives and investors calling her crazy and other unspeakable things for not ‘taking Skydance’s money,'” Rich Greenfield of LightShed Partners wrote Wednesday.

So why did Redstone pull out – and what could the decision mean for the company it controls?

“Ultimately, we believe the legal risk of Skydance’s proposed transaction proved far too high compared to National Amusements’ alternatives,” Greenfield wrote, noting that the Skydance transaction was “big” for Redstone and NAI but “horrible” for Paramount’s public shareholders.

Skydance, which has previously collaborated with Paramount on the production of popular film franchises such as “Mission Impossible,” “Top Gun: Maverick” and “Transformers,” reportedly revised its offer several times after non-voting shareholders expressed concerns on the terms of the initial discussions, which would have given Redstone $2 billion in cash as a first step in the transaction.

But critics argued the offering still unfairly benefited Redstone while diluting the holdings of public stakeholders. As a result, the threat of litigation loomed.

Hamilton acknowledged that the threat posed a major obstacle to the transaction, especially since Redstone likely had to be indemnified against possible lawsuits as part of the deal.

“I just don’t think Skydance was willing to accept that level of risk,” he said.

What’s next for Paramount

Amid merger drama, Paramount announced the departure of CEO Bob Bakish in late April after being named would disagree with Redstone about the Skydance deal. It has since been replaced by an “Office of the CEO” consortium made up of three division heads of the company.

The story continues

Executives gathered for the company’s annual shareholder meeting on June 4, where they unveiled a plan to cut costs worth $500 million. The plan will include layoffs, exploring potential asset sales and partnering with competitors for streaming joint ventures.

The company has already considered selling part of its business, which industry observers say will be the norm after Skydance’s collapse. BET And Show time have in particular been the subject of constant…