Skydance-Paramount Global Merger Clears FCC At Last

The FCC on Thursday finally signed off on the marriage of Skydance Media and Paramount Global.

The $8.4 billion deal has faced myriad challenges on its way to the finish line but will be made official in the coming days by the companies. No shareholder vote or other approvals are required. With the FCC’s blessing, the transaction will reshape the media landscape and recast David Ellison, chairman and CEO of the combined company, as a top Hollywood power player.

“Americans no longer trust the legacy national news media to report fully, accurately, and fairly. It is time for a change,” said FCC chair Brendan Carr in a statement. “That is why I welcome Skydance’s commitment to make significant changes at the once storied CBS broadcast network. 

“In particular, Skydance has made written commitments to ensure that the new company’s programming embodies a diversity of viewpoints from across the political and ideological spectrum. Skydance will also adopt measures that can root out the bias that has undermined trust in the national news media. These commitments, if implemented, would enable CBS to operate in the public interest and focus on fair, unbiased, and fact-based coverage. Doing so would begin the process of earning back Americans’ trust. Today’s decision also marks another step forward in the FCC’s efforts to eliminate invidious forms of DEI.”

Read the full FCC memorandum of approval and order here.

Skydance says the commitments ae voluntary, but they were noted within the merger approval record.

The merger was announced in July 2024 after a rocky courtship, only to face uncomfortable headwinds and awkward headlines as it contended with the up-to-date administration in Washington, D.C. Today’s FCC greenlight was the last major hurdle and it proved a huge one, after the companies had agreed to settle a Donald Trump lawsuit against CBS News and other concessions that left a sour taste in order to secure regulatory approval.

As the agency’s OK seemed near, the season premiere of South Park on Paramount’s Comedy Central on Wednesday eviscerated Trump – and Paramount’s legal settlement – with a vehemence that’s become increasingly uncommon.

What it means

After all the drama, the deal is done. Paramount Global assets, from storied Paramount Pictures and its Melrose Avenue lot and the CBS broadcast network, 28 TV stations, television studios, streaming service Paramount+ and cable channels, are now set to formally combine with Skydance. Ellison launched the latter company in 2010, shepherding its rapid expansion from film to TV, games, animation, sports and up-to-date media. Skydance has been a longtime partner with Paramount as co-financier on marquee franchises from Mission: Impossible to Star Trek, Transformers and Top Gun. 

The son of billionaire Larry Ellison, who is Skydance’s biggest investor and the co-founder and executive chairman of software giant Oracle, David Ellison has promised to lean into the intersection of technology and entertainment.

The deal marks a notable C-suite comeback for Jeff Shell, head of RedBird Capital Sports and Media, who will be president of the merged company. Shell was ousted as CEO of NBCUniversal in 2023 after being the subject of complaints about inappropriate contact with a subordinate, CNBC anchor Hadley Gamble.

Ellison and Shell will step in for the unusual CEO troika of George Cheeks, Brian Robbins and Chris McCarthy, who have been running Paramount Global since Shari Redstone, controlling shareholder of Paramount, ejected former chief Bob Bakish in April 2024. The trio slashed costs with rounds of layoffs in a major reset.

The rest of the org chart is still coming together. Cheeks, president and CEO of CBS, is expected to remain with Skydance, which doesn’t have a broadcast business. Skydance Chief Creative Officer Dana Goldberg will run the film studio. Cindy Holland, the former Netflix TV chief hired by Ellison as an advisor last fall, will segue to Paramount+.

The deal will see the Ellison family, with Gerry Cardinale’s RedBird Capital, acquire Redstone’s controlling interest in Paramount, a media giant assembled over decades by her father, the tardy Sumner Redstone. Redstone’s interest in Paramount is held through her family holding company National Amusements, which Skydance will acquire for $2.4 billion.

It’s a convoluted operation with a much smaller private company going after a much bigger, publicly traded entity. Skydance is also offering $4.5 billion in cash to other Paramount shareholders to acquire some Class A and Class B shares at, respectively, $23 and $15. Paramount has two classes of stock. The As are fewer and hold voting rights, the Bs are much more widely held and don’t come with a vote.

Paramount Class B shareholders had already threatened lawsuits before the deal closed and can cue them up now.

Plaintiffs may include vocal fund manager Mario Gabelli, whose Gameco holds the largest number of Class A voting shares after Redstone. Gabelli had pushed in Delaware Chancery Court for more disclosure on the the transaction to asses if the $2.4 billion payout to Redstone is enriching the Paramount Global non-executive chair at the expense of other shareholders.

The deal calls for Paramount to acquire Skydance in an all-stock merger that values the company at $4.75 billion. At the close, the Skydance investor group will own 100% of New Paramount Class A Shares and 69% of outstanding Class B shares — or about 70% of the pro forma shares outstanding.

The investor group will inject $1.5 billion of fresh cash into Paramount’s balance sheet.

Deal drama

As negotiations unfolded, Hollywood, unlike Wall Street, was rooting for Ellison. A private equity buyer like Apollo, which made an offer, could acquire the storied lot for real estate. An approach by Warner Bros Discovery and preliminary offer by Sony had the town understandably wary of another major studio merger. Other interested parties included a group with Steven Paul – last seen working with Jon Voight on Trump’s plan “to make Hollywood Great Again”; ones led by Edgar Bronfman Jr. Barry Diller and Byron Allen; and a controversial consortium called Project Rise. Ellison’s offer, tweaked and sweetened several times, ultimately carried the day.

Then Trump won the election with a grudge at mainstream media and flurry of lawsuits against outlets. They included a $20 billion challenge to CBS and 60 Minutes filed in a Texas court over the newsmagazine’s editing of an interview with Democratic presidential candidate Kamala Harris. The company called the suit meritless, as did legal experts. But any deal involving the transfer of broadcast licenses requires approval by the FCC, chaired by Trump supporter Carr. The merger remained in regulatory limbo until Paramount Global settled with the president in early July. Trump continues to peg the deal as worth more, which Paramount has denied. Lawmakers and interest groups slammed the company for a terrible precedent a major hit to press freedom. They call the settlement a bribe and have threatened to sue.

The longtime executive producer of 60 Minutes Bill Owens resigned citing concerns over editorial independence. Wendy McMahon, president of CBS News, also left, noting disagreements with Paramount on the “path forward.” CBS announced plans to end the The Late Show With Stephen Colbert just days after its host and Trump critic called the 60 Minutes settlement “a big fat bribe.” Protestors have since been flocking to the Ed Sullivan Theater in New York City to shout “Colbert Stays! Trump Must Go!”

Ellison met recently with FCC officials and according to the deal docket “discussed Skydance’s commitment to unbiased journalism and its embrace of diverse viewpoints, principles that will ensure CBS’s editorial decision-making reflects the varied ideological perspectives of American viewers.”

Carr said Skydance has committed to putting an ombudsman in place for two years to review complaints of bias at CBS News, and to ending any diversity, equity and inclusion policies in place at Paramount. DEI was an early target of the Trump administration. It’s been bruising.

His announcement also noted an anticipated injection of capital into local news, but he’s referring to the previously announced $1.5 billion capital investment in Paramount across its operations, including broadcast. He said Skydance reaffirmed “a commitment to localism as a core component of the public interest standard, and emphasizes that it will work closely with its affiliated broadcast stations to ensure a productive partnership that will strengthen its affiliates’ ability to serve their local communities.” Again, Skydance says these are voluntary.

Operationally, it hasn’t been basic. Paramount just inked a up-to-date five-year global licensing deal with star South Park creators Trey Parker and Matt Stone but only after the duo publicly blamed the Skydance merger for “f*cking up” their show and Skydance executives for interfering in contract talks. Under the agreement, Skydance got to vet any material transactions while the deal is pending.

Making history

The merger marks the end of the Redstone era and the start of up-to-date company, also family owned.

Sumner Redstone’s entertainment roots began with his father’s  drive-in theater in a Boston suburb in 1934, which grew into a chain that ultimately became a major circuit called National Amusements presided over for years by Shari Redstone. Sumner Redstone entered the family business in 1954 and become CEO in 1967. He acquired cable TV programmer Viacom, parent of MTV, in a hostile takeover in 1987 and then CBS in 1999 – keeping the two separate. In between, the notoriously aggressive mogul acquired Blockbuster, whose cash flow helped him win Paramount Pictures parent Paramount Communications in 1994 after a brutal bidding war with Barry Diller and John Malone. Blockbuster was later spun off, sold to Dish and went bankrupt.

In 2000, Viacom and CBS merged, becoming Viacom Inc. They split into two companies again in 2005. In 2019, they merged again. An early digital adopter, the company renamed streaming service CBS All Access to Paramount+ in 2021. In 2022, ViacomCBS changed its name to Paramount Global.

Sumner spent decades insulting Shari’s business acumen and leadership skills, refusing to name a successor. As his health declined in his 90s, the divorced tycoon began living with Sydney Holland and Manuela Herzer, two women with lavish spending habits who got themselves written into his will and attempted to keep Shari away from her father. She intervened, reconciled with Sumner and pushed the two women out of the pictures in a soap opera legal battle. The dysfunctional dynamics were set out in the 2023 book Unscripted: The Epic Battle for a Media Empire and the Redstone Family Legacy. She returned to the family business, becoming chair of the merged company in 2019 with her chosen CEO Bob Bakish (that pairing did not end well). In August of 2020, Sumner passed away at 97.

Skydancing

The name Skydance comes from Ellison’s love of aviation and it was originally based out of a hangar at the Santa Monica airport. The company’s first feature, It started in film with Coen brothers’ western True Grit (2010), its first, receiving 10 Oscar nominations. Soon after, Skydance secured its first notable partnership, with Paramount Pictures and Tom Cruise, to finance and produce major franchises. It’s worked on Mission: Impossibles from Ghost Protocol in 2011 through The Final Reckoning this spring, on Jack Reacher and on Top Gun: Maverick, which helped jolt the box office out of deep Covid doldrums in 2022.  

Skydance Television launched in 2013 with comedy series Grace and Frankie at Netflix and Emmy-winning drama Manhattan on the former WGN America. Michale Bay’s 6 Underground starring Ryan Reynolds was its first feature film for the streamer working on film and TV projects with major platforms from The Old Guard and The Adam Project to The Tomorrow War, Foundation, AIR and Cross.

The company created Skydance Interactive in 2016, Skydance Animation in 2017 and Skydance New Media in 2019 and Skydance Sports in 2021.

In 2018, it formed a strategic partnership with China’s Tencent, a relationship noted by the FCC. Ellison most recently reiterated that Tencent will hold a non-voting, passive interest of less than 5% in the combined company with no governance rights or ability to influence operations.

A $400 million capital raise led by KKR in 2022 with RedBird and Tencent participatin, valued the company at over $4 billion.