Paramount Appears Set to Back Away From Skydance Deal, Leaving Uncertain Path Forward

Paramount's special board committee appears to have cooled on the offer, which would have seen the David Ellison-led studio, joined by financial partners RedBird Capital and KKR, acquire controlling shareholder Shari Redstone's stake in the company and then merge Skydance into Paramount, keeping it as a publicly traded company, with new leadership at the helm.

Skydance had been in a 30-day exclusive negotiating window, and had proposed a revised offer last weekend that would have offered some sweeteners for Paramount common shareholders, some of whom had been vocally opposed to the deal. That window ends today, and is not likely to be extended.

Another source close to the deal says that talks between the sides continue.

Paramount has another offer on the table: A $26 billion all-cash deal from Apollo and Sony Pictures. It is not immediately clear what the status of that deal is, though it would carry substantially more regulatory concerns, due to Apollo's existing ownership of broadcast TV stations, and Sony's status as a Japanese company.

Redstone is said to be unenthusiastic about that deal.

The end of the Skydance talks capped off an eventful week for Paramount, with the company parting ways with CEO Bob Bakish on Monday, replacing him with a trio of executives working in an "office of the CEO."

While Bakish had largely declined to comment on the deal chatter, he told analysts on the company's fourth-quarter earnings call that he was focused on creating value for all shareholders (emphasis his), suggesting that there was daylight between him and Redstone, and friction that could have led to his ouster.

Bakish's departure followed the news that four board members would not be standing for reelection at the company's next annual meeting, set for June 4. It was not immediately clear what sparked their decision, though there was speculation that it could be related to deal talks.

With the Skydance deal seemingly off, and the Apollo-Sony deal's regulatory viability in question, Paramount may need to find its own path forward under its new leaders Brian Robbins, George Cheeks and Chris McCarthy.

"Going forward, we are finalizing a new long-term plan to best position this storied company to reach new and greater heights in our rapidly changing world," the trio wrote to employees shortly after taking the helm of the company.

A source says that the executives are prepared to lead the company long-term, and confirmed that a formal strategic plan will be communicated to staff in the coming weeks.

Paramount shares are down about 5 percent for the day.

Spokespersons for Paramount, Skydance, Shari Redstone and the board special committee all declined to comment.