Market Data 
By Dawn Chmielewski
LOS ANGELES (Reuters) -Media heiress Shari Redstone abruptly ended talks with David Ellison’s Skydance Media on Tuesday, killing the potential sale of a controlling stake in Paramount Global to the independent studio, sources familiar with the negotiations said.
The move by Redstone, Paramount’s largest shareholder, came just as it appeared an agreement was near. A special committee of Paramount’s board had been scheduled to discuss a proposed deal when it received word that Redstone had called off discussions.
Redstone, the daughter of late media tycoon Sumner Redstone, had been expected to sell her family’s stake to Ellison as part of a $2.25 billion deal for the family’s holding company, National Amusements. It was one element of a complex $8 billion transaction that would have resulted in the merger of Paramount, a venerable Hollywood studio, with the smaller Skydance. After reaching a deal on economic terms, National Amusements said it “could not come to agreement” with Skydance on other, unspecified issues. It did not elaborate. The Wall Street Journal, citing people familiar with the matter, first reported the deal had fallen apart, and that Redstone would likely pursue a sale of National Amusements without trying to merge Paramount into another company.
National Amusements owns movie theaters in the U.S., Britain and Latin America and holds the Redstone family’s 77% of Paramount’s class A voting stock. Two parties are interested in the Paramount stake: independent Hollywood producer Steven Paul and Seagram heir Edgar Bronfman, who is backed by private equity firm Bain Capital.
These prospective buyers gave Redstone other options beyond Skydance, which was founded in 2010, together with the possibility of a lucrative bidding war, according to one person familiar with her thinking.
The Skydance deal collapsed after more than six months of negotiations. Multiple sources said Redstone and Skydance had agreed to the economic terms offered by Ellison and his bidding partners, Redbird Capital and KKR.
But talks became mired on other issues.
Negotiations continued through last weekend to address the concerns, such as Redstone’s desire to be indemnified from any lawsuits arising from a deal, a source said.
Talks reached an impasse over another Redstone demand, that the majority of Paramount’s non-family shareholders endorse the merger, according to two people familiar with deal talks.
Another source close to the negotiations said Redstone had simply soured on the transaction after Ellison’s team reduced its offer for her Paramount holdings.
The sale of National Amusements’ controlling stake in Paramount would have been the linchpin for a second transaction, in which the studio would have acquired Skydance in an all-stock deal.
In a statement Tuesday, National Amusements expressed the desire to continue the “successful production collaboration between Paramount and Skydance” that produced such major film releases as “Top Gun: Maverick,” “Mission: Impossible Dead Reckoning” and “Star Trek Into Darkness.”
Redstone also expressed confidence in the vision outlined last week by a trio of executives who now lead Paramount at the annual shareholder meeting.
The co-CEOs — Showtime/MTV Entertainment Studios chief Chris McCarthy, CBS head George Cheeks, and Paramount Pictures President and CEO Brian Robbins — said they planned to seek strategic partnerships for Paramount+, explore licensing opportunities and streamline the company with $500 million in additional cuts.
“With any hopes of a deal for (Paramount) independent shareholders now more likely in the rear-view mirror, we will revisit our estimates to address the new Annual Meeting plan to determine our updated valuation,” media analyst Robert Fishman said.
The special committee of Paramount’s board of directors said it met on Tuesday to discuss progress of a potential deal. Before the meeting started, committee chair Charles Phillips had been informed by National Amusements that “it did not have an agreement on a deal with Skydance Media and didn’t anticipate a path forward on this transaction.” He informed the other members, according to one of the sources familiar with the chronology of events.
No vote was taken regarding any potential transaction.
Skydance declined Reuters request for comment.
