Skydance has been working with private equity firms RedBird Capital Partners and KKR & Co. on a deal to buy National Amusements, Shari Redstone's holding company. It controls 77% of Paramount's voting shares.
But that deal is contingent on Skydance merging with Paramount, and the likely structure for a merger would be a full privatization of the larger media company, the people said.
Redstone is considering a sale as the media landscape shifts from traditional television to streaming. Although Paramount Global has operated a profitable business for decades, it is smaller than Netflix, Google's YouTube, Apple, Amazon and other larger streamers that have larger balance sheets to afford sports and entertainment content.
No takeover is secured and the talks could fail.
It is unclear whether Redstone would demand a different premium for the sale of National Amusements than the remaining shareholders of Paramount Global would receive.
Skydance would need additional capital to acquire Paramount, which has a market cap of $8.2 billion and about $15 billion in debt. Some of that funding could come from Skydance's private equity partners and Larry Ellison, the billionaire co-founder of Oracle and David Ellison's father. Skydance has not yet sought external financing because it has not yet decided whether it wants to move forward with the deal, the people said.
Skydance is not interested in a deal in which it would acquire only National Amusements but not all of Paramount, the people said. While such a deal would give Skydance control of Paramount, it would not solve Paramount's problems as a publicly traded company, which include operating the growing but loss-making streaming service Paramount+ and operating declining linear cable channels such as MTV, VH1, Comedy Central and Nickelodeon.
Spokespeople for RedBird, Skydance, Paramount Global and National Amusements declined to comment.
Warner Bros. Discovery has also held preliminary talks to acquire Paramount Global, according to people familiar with the matter. If Redstone sells to Skydance, one motivating factor would be her fear that Warner Bros. Discovery would prefer to merge with Comcast's NBCUniversal, one of the people said.
Puck first reported Skydance's interest in acquiring National Amusements. The Wall Street Journal reported last week that Skydance was interested in a two-part deal that would involve merging Skydance and National Amusements. Bloomberg first reported on the first exchange of company information.
Disclosure: Comcast NBCUniversal is the parent company of CNBC.
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