Paramount To Negotiate With Sony & Apollo But Continue Skydance Talks; James Cameron, Ari Emanuel Back David Ellison - Update

The committee met over the weekend to consider its approach to the preliminary $26 billion cash bid, including the assumption of debt, made jointly by the entertainment giant and global private equity film.

But the David Ellison studio is still in the mix as Paramount seeks to continue those talks - just non-exclusive, obviously, Deadline has learned.

That's a deal that won't have any regulatory issues in closing, and is the one that Par's controlling shareholder Shari Restone prefers.

Paramount shareholders hate the Skydance deal, just as much of Hollywood detests the idea of Paramount and Sony merging - a combination that would need to pass regulatory scrutiny. The assets would also likely need to be split up.

Hollywood, however, sides with Shari. In an FT story today, James Cameron says, "I love the Ellison idea." Ari Emanuel calls David Ellison "a natural acquirer" of Paramount.

Ellison, backed by Larry Ellison and RedBird Capital, would take over Paramount by acquiring Redstone's controlling stake. It would remain a public company, which would then in a second step acquire Skydance in an all-stock deal. Shareholders have been sniping for months over Redstone's premium, and dilution from the all-stock deal (which means issuing millions of new shares). The new owner would inject fresh capital into the merged company led by Ellison and Jeff Shell, which would be restructured.

PREVIOUSLY: A one-month exclusive negotiating window between Paramount Global and Skydance ended at midnight last night and has not been renewed. But the David Ellison company is still in the mix as a special committee of Paramount's board meets today. The group is considering how to approach a very different all-cash offer from Sony and Apollo.

Deadline hears that the committee may be lookin at a so-called "go shop" provision, which allows a public company to explore competing offers even it's already has a firm purchase offer in hand. The duration of a go-shop period is usually one to two months. 

Par's controlling shareholder Shari Redstone has favored a deal with Skydance, backed by Larry Ellison and Gerry Cardinale's RedBird Capital, although other investors have been been hating on it for over a month now since, even a sweetened offer. It would leave the company public. Sony and Apollo have lobbed a preliminary offer of about $26 billion but haven't yet had access to the books.

Agents, managers and others in Hollywood fear a Par-Sony hookup which — if it passes regulators — would reduce the number of big players for shopping projects and doing business.

PREVIOUSLY: The clock is ticking down to midnight, the end of a month-long exclusive negotiating window between Paramount Global and Skydance Media. The David Ellison company has been circling Paramount for months and lobbed several offers to buy out Shari Redstone's controlling stake, backed by Oracle co-founder Larry Ellison and Gerry Cardinale's RedBird Capital.

The Skydance team spent the past month taking a close look at the books. In the face of clamorous objections from other Paramount shareholders on the initial deal structure, it sweetened the pot for owners of the common stock. The revised offer is said to be Skydance's best and last (although it still got a thumbs down from other investors).

The timing was tight to clinch a deal in a month but there had been talk of a possible extension. It's not clear if that's happening now, maybe unlikely, because Paramount now has another offer on the table from a team of Sony Pictures Entertainment and private equity giant Apollo. After waiting a bit, the partners formally asked to discuss a cash deal potentially worth $26 billion. They still need to do their own due diligence.

Paramount had set up a special board committee to explore offers. It can receive and acknowledge another offer during an exclusive window, but it cannot engage with the other party. So Skydance would need to cool its heels for a bit while Paramount examined the other offer. The question is will it wait, or bail?

Meanwhile, the leadership of Paramount Global changed abruptly earlier this week. Chief executive Bob Bakish left and was replaced by three top division heads in a new office of CEO. The company also declined to take questions on its quarterly earnings call, a rare occurrence and the latest twist in an unpredictable ride at Paramount this year.

A deal with Sony would mean taking Paramount private in a merger of two big studios, not a popular prospect in Hollywood since it means one less place to shop projects. It would also likely split the company up since Sony of Japan can't own U.S. broadcast assets. Skydance would keep it public, with a cash infusion and a restructuring.