Skydance, Paramount Dismiss Objections to Planned $8.4 Billion Merger

Skydance Media and Paramount Global have dismissed objections to their planned $8.4 billion merger, with both companies expressing confidence in the deal's benefits and their ability to address regulatory concerns. The merger, announced in July 2024, has faced criticism from some quarters, including a petition to the Federal Communications Commission (FCC) alleging foreign influence and ideological bias.

Skydance, led by David Ellison, has agreed to acquire National Amusements, the holding company owned by Shari Redstone that controls about 77% of Paramount's voting shares. The deal, which includes a 45-day "go-shop" period for alternative acquisition proposals, is expected to close in the first half of 2025.

Despite the concerns raised by the Center for American Rights, both Skydance and Paramount remain committed to the merger. In a joint statement, the companies said, "We are confident that the proposed transaction is in the best interests of all stakeholders, including shareholders, employees, and customers. We will continue to work with the FCC and other regulatory bodies to address any concerns and ensure a smooth approval process."

The merger would see Skydance acquire National Amusements and then merge with Paramount, with Skydance owning 70% of the combined company's outstanding equity. David Ellison, son of Oracle co-founder Larry Ellison, would become CEO of the new entity, while former NBCUniversal CEO Jeff Shell would serve as president.

The deal has been praised by some analysts for its potential to create a powerful entertainment conglomerate, while others have raised concerns about the combined company's ability to compete in the rapidly evolving media landscape. CFRA Research analyst Kenneth Leon, for example, downgraded Paramount's stock rating from "buy" to "hold" and reduced his price target, citing the deal's complexity and potential challenges in achieving financial targets.

In response to the petition from the Center for American Rights, the FCC has not yet issued a formal response. However, the agency has the authority to review mergers and acquisitions involving broadcast and cable companies to ensure they are in the public interest. The FCC could impose conditions on the merger, such as requiring Skydance to divest Tencent's stake or limit its influence over decision-making processes, to mitigate potential risks.

In conclusion, Skydance and Paramount have dismissed objections to their planned $8.4 billion merger, expressing confidence in the deal's benefits and their ability to address regulatory concerns. The merger, which would create a powerful entertainment conglomerate, has faced criticism from some quarters, including a petition to the FCC alleging foreign influence and ideological bias. The FCC has not yet issued a formal response to the petition, but the agency has the authority to review the merger and impose conditions to mitigate potential risks. As the merger process continues, both companies and the FCC will need to navigate the complex landscape of regulatory oversight, foreign influence concerns, and market dynamics to ensure a successful outcome.