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Paramount–Skydance Deal: Why This Merger Is Still More Likely to Close Than You Think
Executive Summary
The proposed acquisition of Paramount Global (NASDAQ: PARA) by Skydance Media, backed by RedBird Capital and the Ellison family, has emerged as one of the most intriguing media M&A plays of 2025. It’s a two-step transaction with big implications for legacy media, merger arbitrage investors, and shareholder rights.
Despite noise around litigation, regulatory uncertainty, and insider control, this deal remains structurally intact, financially sound, and strategically logical. With a 25–30% arbitrage spread and limited real deal-killers, we believe the Paramount–Skydance merger has a high probability of closing—with any shareholder litigation likely to sweeten, not scuttle, the outcome.
The Deal Structure
This is not a simple buyout—it’s a two-step merger with distinct mechanics:
- Skydance acquires National Amusements (NAI) for $2.4 billion. NAI controls ~77% of Paramount’s voting shares (Class A), via the Redstone family.
- Paramount Global merges with Skydance, forming “New Paramount,” a streamlined media production-distribution hybrid.
Estimated Combined Value: ~$28 billion
Total Deal Value: ~$8.4 billion in equity value
Shareholder Consideration
| Share Class | Consideration Offered | Notes |
| Class A (voting) | $23 per share in cash or 1.5333 shares of New Paramount stock | Controlled by NAI, which has already agreed to the deal |
| Class B (non-voting) | $15 per share in cash or 1 share of New Paramount stock | Subject to proration if cash elections exceed $4.3B pool |
As of July 2025, PARA.B trades around $12.94, implying a 15% spread to the deal price.
Deal Timeline & Status
- Original Close Date: April 7, 2025
- Current Period: First automatic 90-day extension
- First Extension Deadline: July 6, 2025
- Second Extension Window: Through October 4, 2025, if needed
Regulatory Review
- SEC: Approved
- European Commission: Approved
- FCC: Pending
- Reviewing broadcast license transfers
- Concerns over:
- Tencent’s minority stake in Skydance (not controlling)
- CBS editorial independence
- Paramount’s DEI policies (criticized by FCC commissioner Brendan Carr)
But: The FCC has historically approved vertical deals unless national security or direct media market consolidation is at stake. That’s not the case here.
Why the Deal Still Likely Closes
1. It’s a Vertical Merger—Not a Horizontal Monopoly
Skydance produces hit films like Top Gun: Maverick and Mission: Impossible. Paramount distributes content via CBS, Pluto TV, Showtime, and Paramount+. The two don’t compete head-to-head, and the deal won’t increase media ownership concentration.
Historically, vertical media deals face fewer regulatory hurdles than horizontal ones (e.g., Comcast–NBCUniversal in 2011).
2. PARA.B Shareholder Litigation = Bump Risk, Not Break Risk
Lawsuits from PARA.B shareholders claim the deal unfairly benefits insiders (Class A gets $23 vs. $15 for B). And they’re right to complain—Class B shareholders hold ~90% of shares but have no voting power.
However, the most likely outcome isn’t deal termination—it’s a minor bump in offer price, a cash settlement, or enhanced disclosures. Think: Dell 2013, where shareholder pressure nudged the price up slightly, but the deal still closed.
3. Downside Support + Breakup Fee Incentives
- Pre-deal PARA.B traded around $8
- Multiple bidders (Apollo, Byron Allen, Sony) have expressed interest before
- Breakup fee = $400 million, a major deterrent for Paramount to walk away
- Even in a break scenario, PARA.B likely has a 30–35% downside cushion supported by interested parties waiting in the wings
4. Committed Sponsors + Willingness to Adjust
Skydance, RedBird, and KKR affiliates have deep experience in complex media deals and clear incentive to close this one. Reports suggest Redstone may retain a super-voting class, but sponsors appear open to adjusting terms to avoid litigation landmines.
This isn’t a “take-it-or-leave-it” moment—it’s a dynamic negotiation that’s heading toward resolution, not collapse.
Estimated Risks
| Risk | Impact | Notes |
| Class B litigation | ~20% | Most material. But outcome likely = revised terms or cash settlement—not deal break |
| FCC approval delay | ~10% | Key milestone; approval may be slowed but not blocked |
| Alternative bid/breakup | ~5% | Apollo and Byron Allen have circled before, but $400M fee deters back-out |
Key Investor To-Dos
- Watch for FCC approval – clears regulatory runway
- Monitor shareholder litigation outcomes – expect updates from Delaware Chancery
- Election materials – Schwab and other brokers will send cash/stock election forms
- Tip: Submit your election ASAP to maximize chance of all-cash payout
- Only $4.3B allocated to PARA.B cash pool—early action matters
Final Take: A Smart Risk in a Noisy Market
This is one of the best current merger arbitrage opportunities in the public markets:
- PARA.B trading at ~15% discount to deal price
- Legal fight = more likely to result in sweetener than shutdown
- Paramount doesn’t want to cough up $400 million in break-up fees
- Vertical structure + regulatory history = low antitrust risk
Our Base Case: Deal closes at $15/share for PARA.B.
Bull Case: Litigation bumps PARA.B payout slightly higher.
Bear Case: Deal breaks, but PARA.B has ~$8/share downside floor.
My Final Verdict
This deal is messy, yes—but if you really just break down the facts, I think it’s structured, incentivized, and salvageable. If you can stomach some litigation noise and regulatory posturing, PARA.B is offering rare mispriced exposure to a still-likely closing.
Estimated Probability of Deal Closing: 90% (my revised July 2025 outlook)
Next Major Catalysts: FCC decision + PARA.B shareholder litigation settlement window
Let the drama play out—but position smartly while the market hesitates.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.
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