Four directors to leave Paramount board as company holds merger talks: report

By Ciara Linnane

The media conglomerate is in exclusive merger talks with Skydance Media, the independent production company run by David Ellison

Four of Paramount Global Inc.'s directors are expected to step down from the media conglomerate's board in the coming weeks as it continues talks over a potential merger, the Wall Street Journal reported Wednesday, citing people familiar with the situation.

Dawn Ostroff, a former Spotify Inc. executive, Nicole Seligman, an attorney and former Sony Entertainment Inc. president, Frederick Terrell, a veteran investment-banking executive, and Rob Klieger, a longtime attorney to Paramount Chair and controlling shareholder Shari Redstone, are all expected to leave the board, the people said.

While the Journal reportedly earlier Wednesday that only three directors would be departing Paramount's board, the publication subsequently updated its story to add that Terrell would be leaving, as well.

The news comes as Paramount (PARA) (PARAA) continues to conduct exclusive merger talks with Skydance Media, the independent production company run by David Ellison, son of Oracle Corp. founder Larry Ellison. Skydance has previously partnered with Paramount on a number of movies, including the 2022 blockbuster "Top Gun: Maverick."

Redstone, the daughter of the late Paramount Chief Executive Sumner Redstone, has been reportedly keen on selling a controlling stake in National Amusements - her privately held company that owns around 80% of Paramount's shares - since last year.

Read also: Paramount's stock surrenders gains as analysts see 'obstacle course' in battle for control

Paramount agreed to a 30-day period for talks with Skydance earlier this month - a move that some viewed as controversial, given how Paramount opted for those talks instead of accepting a reported $26 billion all-cash offer from private-equity firm Apollo Global Management Inc. (APO)

Redstone is said to have favored the Skydance offer amid concerns about Apollo's financing.

Paramount is home to a range of media assets including its namesake movie studio; CBS; cable channels including Nickelodeon, Showtime and Comedy Central; and the Paramount+ streaming service.

The board departures may be disclosed in a regulatory filing as early as this week, according to the Journal.

Skydance is said to want to merge the two companies' film studios, though that would require a second deal that must be approved by an independent committee created to oversee the process, the Journal previously reported. That group must also ensure any deal is good for all Paramount shareholders and not just National Amusements.

One Paramount shareholder has already expressed concern that the Skydance bid prioritizes Redstone's interests over other shareholders. Matrix Asset Advisors, which owns 335,445 Paramount shares, said in an open letter on Monday that it believes Paramount can thrive in the current environment and that it's throwing its full weight behind CEO Bog Bakish and his board's turnaround strategy.

"However, we are distressed by recent reports that the Board is strongly considering a suboptimal bid from Skydance that prioritizes the interests of one shareholder over the broader shareholder base," the letter said.

While Redstone would enjoy a significant premium, the majority of shareholders would not, "and would be forced to finance a speculative investment in Skydance in a transaction significantly dilutive to shareholder value. Overall, this transaction, as contemplated, would be detrimental to the company's value and contrary to the Board's fiduciary duty," the letter continued.

Paramount's stock was down 5% Wednesday and has fallen 30% this year to date, while the S&P 500 SPX has gained around 8% so far this year.

-Ciara Linnane

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04-10-24 1442ET

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