US media giant Paramount Global is edging closer to a takeover as film studio Skydance has entered into exclusive negotiations with the conglomerate’s major shareholder, National Amusements, in order to broker a deal that would give it control.

Skydance triggered the 30-day exclusivity window last week (April 3), indicating that an agreement on a Skydance-Paramount merger is close, with the two parties having been engaged for a number of months to try and find a resolution.

Alongside its storied film studio division, Paramount Global is a major sporting rightsholder whose national network CBS this year aired the most-watched Super Bowl in history.

The deal would reportedly see National Amusements receive $2 billion in cash for the sale, while Paramount and Skydance merge in a $5 billion all-stock deal.

Despite the clamor for an agreement from National Amusements and Skydance, smaller Paramount shareholders are already expressing concerns at this reported figure, with many unlikely to receive a similar per-share rate as National Amusements.

Skydance president David Ellison will need to find a way to placate a large number of non-National Amusements shareholders or recoup a number of these shares through a stock repurchase.

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National Amusements owns 77% of Paramount Global's voting stock, but due to the two-tiered nature of the company’s stock makeup, it owns less than 10% of the overall company.

Matrix Asset Advisors, an investment firm with a significant stake in Paramount Global (355,445 shares), publicly advised National Amusements this week not to accept the proposed $5 billion offer from Skydance, stating that it will be “detrimental” to the value of the company.

National Amusements had already rejected an offer from private equity firm Apollo Global Management for $26 billion (inclusive of $14.6 billion of Paramount debt), however, that offer was rejected with National Amusements president Shari Redstone seemingly voicing concerns over the sourcing of Apollo’s funding.

Redstone, whose father Sumner merged CBS and Viacom to create Paramount Global, has been exploring a sale of Paramount since 2023 amid ongoing struggles including falling revenues and growing costs that have kept the conglomerate and its constituent businesses from profitability.

Upon the publication of its financial results for the calendar year 2023, Paramount revealed that its total yearly revenue fell compared to 2022, from $30.1 billion to $29.6 billion, with rising costs most notably stemming from the purchase and integration of the Showtime network into Paramount+.

The direct-to-consumer segment, headlined by its Paramount+ OTT streaming service, grew 37% over the period but still ended in a year-on-year loss of almost $500 million, although less than what some had projected.

Paramount+ as a service is still yet to be profitable, however in its results, Paramount stated that it expects to achieve domestic profitability by 2025, should it attain expected earnings growth across 2024.

On the linear TV side, the company saw a quarterly contraction of 12%, and a yearly contraction of 8%, likely owing to more and more people cord-cutting and abandoning traditional TV and cable options in favor of OTT streaming.