Why Shari Redstone called off talks with David Ellison’s Skydance on Paramount deal

By Oliver Darcy, CNN

New York (CNN) — Editor’s Note: A version of this article first appeared in the “Reliable Sources” newsletter. Sign up for the daily digest chronicling the evolving media landscape here.

Shari Redstone has finally spoken.

After weeks of endless speculation about the future of Paramount Global, and more than half a year of grueling negotiations, the heiress called off talks with David Ellison’s Skydance Media, astonishing the industry and raising questions about the future of her family-controlled media empire.

The deal went up in flames at the one-yard line. Just as Paramount’s special committee was set to vote on the deal, lawyers representing the Redstone holding company National Amusements Inc. sent word that she had moved to end merger discussions, CNN was told.

Why Redstone ultimately vetoed the deal is now up for discussion. Was Redstone irked by the latest financials of the offer? Was she afraid of shareholder litigation? Is legacy at play? Or is it simply that Redstone just cannot let go of the empire her father, Sumner, built?

The answer, of course, depends — greatly — on who you ask.

One narrative that has emerged is that, while the two parties had agreed on the economic terms, there were still outstanding issues they had not been able to see eye-to-eye on. Chief among them was whether the deal should have been subject to approval from a majority of the minority shareholders. Redstone had advocated for a vote to protect against potential lawsuits; Skydance resisted.

“That was an important term,” a person close to the matter told CNN.

The competing narrative is that Skydance had made a competitive offer. Ellison and his backers, led by Redbird Capital, had repeatedly sweetened the terms of the deal and met all the financial requirements for it to happen over many months of painstaking negotiations. In this version of events, the real reason a transaction is not taking place is because Redstone, advised by Ellison foe Charles Phillips, simply got cold feet.

“Shari got spooked,” as one person bluntly told CNN.

Regardless of the cause, the deal is not happening — and squabbling about the reason it could not get across the finish line does not change that reality. Instead, it underscores the brewing tension between the two sides as the frustrated parties struggled to make a potential marriage work.

And tried they did over the last several months, with the negotiations claiming several high-profile casualties along the way. Over the course of the last few months, Bob Bakish was ousted as chief executive of Paramount Global and four directors resigned from the company’s board. The corporate drama, as many observers have pointed out, has been akin to a real-life “Succession.”

NAI, which has received interest from other parties and will now explore them, offered support Tuesday afternoon for the Office of the CEO at Paramount Global, the post-Bakish triumvirate made up of Brian Robbins, George Cheeks and Chris McCarthy. The trio last week outlined a plan for the company, which includes exploring a joint streaming venture, finding synergies, and reducing costs by $500 million.

“NAI supports the recently announced strategic plan being executed by Paramount’s Office of the CEO as well as their ongoing work and that of the Company’s Board of Directors to continue to explore opportunities to drive value creation for all Paramount shareholders,” the family-owned company said in a statement.

NAI also said it “looks forward to the ongoing, successful production collaboration between Paramount and Skydance.” The two companies have in recent years partnered for blockbusters such as “Top Gun” and “Mission Impossible.”

“At this point, there was an unbelievable amount of uncertainty hanging over the company,” one of the people said of Paramount. “They want the company to be able to move forward.”

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